Intesa Sanpaolo, Unicredit, Banco Bpm, Mps, Bper. How are the accounts of the major banks

16 May 20222 years ago babelfish

How are the accounts of major banks such as Intesa Sanpaolo, Unicredit, Banco Bpm, Mps and Bper going and going. The article by Emanuela Rossi

No war effect, at the moment, on Italian banks but watch out for the rise in the spread and the possible impact on assets. This is the summary of the analysis of the accounts for the first quarter of 2022 – just presented by Intesa Sanpaolo, Unicredit, Banco Bpm , Mps, Bper – carried out by the First Cisl research office. The syndicate led by Riccardo Colombani recalls the write-downs of Russian assets by the first two Italian groups – Intesa Sanpaolo and Unicredit, respectively for 800 million and 1.3 billion million -, which however recorded good performances and confirmed dividends .

Precisely for this reason, the First CISL secretary calls for an end to the current cost compression policy and to reverse the trend, aiming to recognize labor productivity through stupendous increases. In fact, it should be remembered that in three months, between 31 December 2021 and 31 March 2022, the total employees of the five groups went from 244,672 to 242,026 (-1.1%).

Also on the same wavelength are the analysts of the Dbrs rating agency according to which “the performance of Italian banks in the first half of the year does not disappoint”. However, experts do not deny that there is a risk due to exposure to Russia especially for the Italian banking sector, historically one of the most exposed within the EU towards the former USSR.

FIRST CISL STUDIO

Going into a bit more detail, the First Cisl study highlights how the net profit holds despite the adjustments are rising: those on loans increased by 82.6% and without the write-downs of the Russian activities of Unicredit and Intesa, the trend it would even be the opposite, with a sharp reduction in adjustments and their reduced incidence (2.4%) on operating revenues. Consequently, net profit, which fell by 47%, would grow by 5.6% compared to the first quarter of 2021.

Plus sign, again on an annual basis, also for core revenues: net interest up by 3.1%, net commissions by 2.9%. According to the union's research department, these are dynamics which, associated with the further reduction in the number of employees (-3.9%) and branches (-11.4%), lead to an increase in the primary margin per employee of 7 , 2% and net commissions per employee of 7.1%. Even the cost / income falls below 50% and it should be noted that the average cost / income of the top seventeen European banking groups is 58%.

Personnel costs on operating income decreased again, passing from 32.5% to 31.2%, with the Italy division of Unicredit which stopped at 44.2% (46.7% the figure at group level) and Intesa Sanpaolo at 46.3%. The increase in revenues and the reduction in operating costs are the basis of the growth in the operating result (+ 6.3%) and in its value per employee (+ 10.7%).

At the level of balance sheet aggregates, there was a decline in the CET1 ratio, which dropped by almost one percentage point compared to the figure at the end of 2021 from 14.92% to 14.04%. For First Cisl it is the combined effect of a series of factors, including the riskiness of the assets towards Russia and the reduction, among the shareholders' equity items, of the valuation reserves, which incorporate the effect of the depreciation of that part of the proprietary securities portfolio, whose value changes directly affect the assets. A trend which, moreover, became more pronounced after March and which could continue, causing further impacts on capitalization.

The same can be said for the possible worsening of the riskiness of assets towards Russia and, in general, the seriousness of the collateral effects of the war on the economy as a whole: these reasons should push the governance to be more cautious about decisions on dividends. and on the buy-back, which, for example, Intesa Sanpaolo and Unicredit have confirmed.

In terms of asset quality, the (net) Npl ratio was stable at 1.9% while net impaired loans fell from 22.78 million to 22.68 million (-0.4%).

COLOMBANI: DIVIDEND POLICIES DO NOT CHANGE SO YOU JUST LOWER COSTS. RECOGNIZING THE PRODUCTIVITY OF WORK WITH SALARY INCREASES

The quarterly data offer Riccardo Colombani, First CISL secretary general, an opportunity to return to talking about operational costs and employee productivity. "The war did not induce the banks to change their dividend distribution policy and purchase of own shares – he explains – even if the first effects on equity of the rise in the spread should advise caution".

For the trade unionist it is “an alarm bell for our country, engaged in the negotiations for the definition of the third pillar of the European Banking Union, that on the common insurance of deposits. The high presence of government bonds in the balance sheets of Italian banks cannot be a penalizing factor ". For this reason, "the pushes in this direction of the 'rigorist' countries must be contained, even if in perspective the only solution is the sharing of the debt at European level".

For their part, however, “the banks cannot continue with the cost compression strategy, highlighted by the drop below 50% of the cost / income figure, which is clearly below the European average, and by the continuous closure of branches”. According to Colombani, however, "a reversal of the trend is necessary: labor productivity, which is constantly growing, must be recognized with adequate wage increases".

STUDIO DBRS

Returning instead to Dbrs, the experts report that part of the effects have already been absorbed by the financial results of the first quarter of 2022 and that several Italian groups, especially the larger ones, have begun to close their operations in Russia. However, it is more difficult to establish the indirect effects of the conflict on local banks as the pressure on asset quality and real risks can only be assessed in the medium or long term.

Certainly the major Italian banks (Intesa Sanpaolo, Unicredit, Banco Bpm, Bper, Mps) are recovering from the two years of the pandemic with revenues increased by 2.1% compared to 2021 thanks to the growth of the interest margin and revenues net of commissions and loan loss provisions. However, it must be said, they note, that – with current interest rates – the margin will remain flat throughout 2022.

And again: plus sign for commissions and minus sign for operating expenses while highlighting provisions for credit losses which in the first three months of the year recorded a sharp increase of 82.6% on a trend basis, reaching 2.3 billion of Euro. According to the calculations of Dbrs experts, excluding the impact of the Russian invasion of Ukraine, this value would have stopped at 0.3 billion, significantly lower than the quarterly values of the last two years.

The default rate is under control, on average below 1%; The stock of gross non-performing exposures (NPE) continues to decline, decreasing by 46% since the end of 2019.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/intesa-sanpaolo-unicredit-banco-bpm-mps-bper-come-vanno-i-conti-delle-maggiori-banche/ on Sun, 15 May 2022 05:09:27 +0000.