Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banco BPM SpA (BNCZF, Financial) reported a strong Q3 performance with a 19% growth in normal activity over the last quarter.
- The company increased its EPS guidance for the full year 2024 from EUR0.90 to EUR0.95, indicating confidence in its financial outlook.
- The interim dividend was approved at EUR600 million, EUR0.4 per share, reflecting a robust dividend policy.
- The Common Equity Tier 1 ratio increased by 132 basis points in nine months, reaching 15.50%, showcasing strong capital management.
- Banco BPM SpA (BNCZF) announced a strategic public offer on Anima, aiming to enhance its business model and deliver value to shareholders.
Negative Points
- The company faces challenges with a reduction in core direct deposits by EUR1.5 billion, partly due to the reduction of institutional customer deposits.
- Operating costs remain in line with last year, but personnel costs increased by EUR75 million, impacting overall expenses.
- The gross NPE ratio saw a reduction, but the company still anticipates EUR700 million of total NPE disposals by year-end.
- The insurance business, although improved, had a reversal of loss components, indicating previous underperformance.
- The transaction with Anima, while strategic, involves complexities and potential risks related to integration and maintaining distributor relationships.
Q & A Highlights
Q: What is the final size of the equity book of BPM Vita post capital increase, and how is the goodwill on Anima's balance sheet treated?
A: The capital increase for Banco BPM Vita will be slightly over EUR2 billion, with current Tier 1 at around EUR800 million. The goodwill from the Anima deal, amounting to EUR1.9 billion, will be deducted for Solvency II but not for Common Equity Tier 1, which remains under the Danish Compromise. (Edoardo Ginevra, Co-General Manager, CFO)
Q: Can you explain the drivers behind the steep jump in insurance results in Q3 and expectations for Q4 and 2025?
A: The Q3 results were boosted by a reversal of loss components, contributing EUR18 million. We expect an average contribution of EUR30-35 million per quarter, aiming for a total of EUR100 million this year and a target of EUR160 million by 2026. (Giuseppe Castagna, CEO)
Q: Is there a limit on Anima's growth that could affect the Danish Compromise application?
A: The Danish Compromise applies as long as there is a valid industrial rationale. We have already obtained it for our financial holdings, and we expect ECB confirmation for this deal to ensure regulatory clarity. (Edoardo Ginevra, Co-General Manager, CFO)
Q: How confident are you that Anima's AUMs from other partners will remain post-acquisition?
A: We have strong relationships with Anima's distributors and long-term contracts. We aim to maintain and potentially expand these relationships, leveraging the new entity's strength. (Giuseppe Castagna, CEO)
Q: Does the Anima transaction affect Banco BPM's ability to participate in bank consolidation in Italy?
A: The transaction is part of our strategy to strengthen our product factory. It does not preclude future consolidation opportunities, especially as we enhance our distribution capabilities. (Giuseppe Castagna, CEO)
Q: What are the expected synergies from the Anima acquisition, and how will they impact EPS?
A: While we haven't quantified synergies, potential areas include expanding distribution and leveraging Anima's capabilities. The deal is expected to be EPS accretive by 10%, with further upside possible from synergies. (Giuseppe Castagna, CEO)
Q: Can you clarify the impact of the Anima deal on Banco BPM's capital and future capital distribution plans?
A: The deal impacts capital by 30 basis points, but we remain well-capitalized. Excess capital will be considered for distribution, aligning with our strategic growth in product factories. (Giuseppe Castagna, CEO)
Q: What is the outlook for Banco BPM's trading profit and NII sensitivity?
A: Trading profit is expected to be slightly negative, around EUR20 million annually, due to mitigated interest rate scenarios. NII sensitivity adjustments reflect this outlook. (Edoardo Ginevra, Co-General Manager, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
