Mps, here are Lovaglio’s accounts and dreams
What emerges from MPS' 2023 budget and what company head Lovaglio said in a thrill of boldness… Facts, words, cabaret jokes and numbers
But can the public-controlled MPS bank really launch into acquisitions, thus using state resources to expand? The answer seems really positive, reading the words spoken by the company manager of Monte dei Paschi di Siena. But let's go in order.
WHAT LOVAGLIO SAID ABOUT THE FUTURE OF MPS
2024 will be a "very important" year for MPS. This is what CEO Luigi Lovaglio (in the photo) states, indicating that the management is aware of having the opportunity to optimize the excess capital for 3 billion "even by seizing the opportunities within the partnerships we already have". This is how Lovaglio responded to a question from an analyst who asked him about the new 'equity story' represented by the bank which closed the balance sheet with an unexpected profit of more than 2 billion. “It's nice to have questions about what to do with so much capital, two years ago you certainly wouldn't have asked.”
The top manager of Rocca Salimbeni, in response to another question, specifies that for the use of excess capital "we have various options within the partnerships we have", without expressly mentioning the one with Anima in managed savings and the one with Axa in bancassurance, "and then ready to seize them if they were to appear on the market".
WORDS AND JOKES: DO YOU DO CABARET IN SIENA?
Many questions from analysts on the possible use of excess capital. To a more direct question on the topic of possible mergers for the bank, CFO Andrea Maffezzoni responds jokingly by indicating "a takeover on UniCredit", the former betrothed who considered the purchase of Rocca Salimbeni for a long time in 2021, which then fell through.
WHAT WILL THE TREASURE DO?
But what will the Treasury want to do with its 39.23% stake in the capital of Monte dei Paschi? To this question from an analyst, who underlined the interesting return that the MPS stock will be able to offer in light of the expected payout of 50% on pre-tax profit in 2024, the CEO Luigi Lovaglio limited himself to saying that it is not up to the bank make comments on the government's intentions for the relative majority stake in the capital of Rocca Salimbeni. And all that was missing was for the head of the MPS company to give orders to the major shareholder, even if Lovaglio is not without egotism. The MPS number one, however, said that the analyst's calculation on the expected return with the payout estimate is correct.
CHAPTER DIVIDEND
The dividend that Monte dei Paschi returns to pay this year will not be 'one-off' but in the future the coupons will be regular and on the gross profit of 2024, which will be in line with last year's result, there will be a payout of 50%. Thus the CEO Luigi Lovaglio in the presentation to the analysts of the 2023 accounts closed with a profit exceeding 2 billion. The bank benefited from a positive fiscal effect which "will not be a one-off", explained Lovaglio considering the 'treasure' of 2.6 billion Dta which can be transformed into tax credits given that the tax base projections have been revised upwards compared to what the industrial plan envisaged. “In other words – he explains – it means that the net impact is not a one-off but will be replicated in the coming years”.
THE MOUNTAIN AND THE BACKPACK
Monte dei Paschi "climbed a mountain with a very heavy backpack", then commented the CEO of the Sienese institute to describe with the analysts, at the presentation of the 2023 accounts, "the turning point of the institute" thanks to the work, he recognizes, of the skills and talents present in the bank. The heavy backpack, explains Lovaglio, was the petitum of the disputes which was reduced to 900 million at the end of the year in addition to the 450 million of the Alken dispute which, however, has already had two positive sentences for the bank.
MPS 2023 NUMBERS
But beyond words, metaphors and jokes, what were MPS's numbers last year? Monte dei Paschi closed 2023 with a profit of 2,052 million, shattering market estimates with a return to the dividend after twelve years and ahead of the indications of the industrial plan, underlines the Radiocor press agency of the Il Sole 24 ore group . The coupon will be 0.25 euros per share for a total amount of 315 million. The jump in profit, which was estimated at 1.3 billion, was affected by the net releases of provisions on risk provisions for the disputes decided by the bank after the favorable rulings of the year which contributed 466 million to the net result. There is also a positive net effect from taxes, equal to 339 million, with a fourth quarter which therefore marks a record: net profit of 1.12 billion.
THE REVENUES OF MONTE DEI PASCHI
MPS indicates total revenues of 3,797 million, up by 21.7% compared to the previous year thanks above all to an interest margin that jumped to 2,292 million, up by almost 50% compared to 2022 (+49.3%) . The interest margin for the fourth quarter of 2023 is substantially stable compared to the previous quarter (-0.1%) with a cost remix between commercial funding and the net cost of relations with central banks. Net commissions at 31 December 2023, equal to 1,322 million, show a decrease compared to those recorded in the previous year (-3.1%) mainly attributable to income from asset management (-3.7%).
MPS COSTS
Operating expenses amounting to 1,843 million are decreasing (-12.6%); however, the amount for the fourth quarter of 2023 increased compared to the previous quarter (+9.2%), incorporating the effects of the contract renewal into personnel expenses (1,180 million). Other administrative expenses amounted to 488 million, down 7.5 percent. The gross operating result of the MPS group, equal to 1,954 million, almost doubled compared to the result of 1,012 million the previous year. MPS therefore recorded a cost of credit to customers of 440 million, up compared to 417 million in 2022. The net operating result was 1,511 million, more than doubled compared to 594 million in 2022 with a fourth quarter of 371 million, a decrease compared to the third (405 million). The operating profit, before taxes, is 1,707 million. Income taxes recorded a positive contribution of 345 million (427 million at 31 December 2022) mainly attributable to the evaluation of the DTAs net of taxes relating to the economic result for the year, which also benefits from the acceleration, within the current probability test based on the objectives of the Plan, of the recovery in value of the DTAs from tax losses following the repeal of the ACE, starting from 2024.
The result above 2 billion, thanks also to the one-off items, allowed the board of directors chaired by Nicola Maione to propose to the shareholders' meeting on April 11th the payment of a dividend of 0.25 euros per share. The proposal, we read in the bank's note, complies with the commitment on the 'dividend ban' imposed by the European Commission among the constraints linked to the public aid granted to Siena, as the bank's capital ratios "are largely higher than the parameters set by the Commission itself to allow the payment of dividends". The coupon, if approved by the ECB and the assembly, will take place with the ex-dividend date of May 20th.
DIRECT COLLECTION
MPS recorded direct collections of 90.6 billion last year (+1.2 billion), loans to customers stood at 76.8 billion, down compared to 30 September 2023 (-1.2 billion) for effect above all of the decline in mortgages (-1.3 billion), which is impacted by the end-of-year maturities. The Group's impaired customer loans in terms of net exposure stood at 1.8 billion, substantially in line both with the levels recorded at 30 September 2023 (equal to 1.8 billion) and with the value at 31 December 2022 (equal to 1.7 billion). As of 31 December 2023, the coverage percentage of impaired loans stood at 49.1 percent. the net equity of the Group and attributable to third parties amounted to 10.0 billion, an increase of 1.2 billion compared to 30 September 2023, mainly due to the positive result recorded in the quarter.
The capital ratios, at 31 December 2023 the fully loaded Cet1 stood at 18.1% (compared to 15.6% at 31 December 2022 including profits for the period) and the Total Capital ratio was equal to 21.6% (compared to 19.5% on 31 December 2022).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/mps-ecco-conti-e-sogni-di-lovaglio/ on Wed, 07 Feb 2024 11:19:24 +0000.