Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BPER Banca SpA (BPXXY, Financial) reported a 2.9% increase in revenues, reaching EUR4.1 billion, showcasing the resilience of its business model.
- The bank's adjusted net profit rose by over 2% to EUR1.1 billion, indicating strong financial performance.
- The cost to income ratio improved to 49.5%, driven by lower HR, consultancy, and marketing costs.
- The CET1 ratio increased to 15.8%, reflecting strong organic capital generation.
- Asset quality remains high, with a net MPE ratio of 1.3%, one of the lowest in the Italian banking sector.
Negative Points
- Net commission income saw a quarter-on-quarter decline of 5.4% due to seasonal factors affecting sales.
- The bank anticipates an increase in the cost of risk in Q4 2024 due to macroeconomic uncertainties.
- Despite strong performance, the full-year guidance for adjusted net profit remains conservative at EUR1.3 billion.
- The bank's bond portfolio duration was reduced, potentially limiting long-term yield opportunities.
- There is a cautious outlook on NII for 2025, with expectations to remain in line with 2023 levels despite potential rate impacts.
Q & A Highlights
Q: Can you explain the rationale behind the CET1 guidance update and its implications for dividend payouts?
A: The CET1 ratio guidance was updated to approximately 15% due to increased capital requirements for operational risk and expected loan growth. This will result in a CET1 ratio allocation of around 50 basis points. Regarding dividends, a 20 basis point dividend has been set aside for the quarter, equating to about 64% of adjusted net profit. The final dividend decision will depend on fourth-quarter performance. - Gianni Papa, Non-Executive Director
Q: Why hasn't the full-year guidance been revised upwards despite strong nine-month results?
A: The guidance remains conservative due to expected seasonal cost increases in Q4, including higher HR costs post-holiday season and invoicing from suppliers. The guidance is maintained at EUR1.3 billion, reflecting a cautious approach. - Gianni Papa, Non-Executive Director
Q: What is the outlook for Net Interest Income (NII) in 2025, and what assumptions are made regarding interest rates?
A: NII for 2025 is expected to be conservatively in line with 2023 levels. The assumption is based on an average interest rate of 2.5% for the year, with loan growth anticipated to offset the impact of lower rates. - Gianni Papa, Non-Executive Director
Q: Can you provide insights into the strategy for the bond portfolio and its duration?
A: The bond portfolio's duration was reduced to 1.9 years due to the purchase of CCTs with a 4% coupon. This strategy aligns with the bank's hedging approach, considering the significant amount of fixed-rate mortgages. An increase in duration is expected in the next quarter. - Simone Marcucci, Chief Financial Officer
Q: Are there any plans for strategic acquisitions or extraordinary actions to utilize the strong capital position?
A: There are no current plans for acquisitions in the financial sector, as the bank is focused on executing its business plan and leveraging existing partnerships, particularly in Bancassurance. No extraordinary cost actions are planned, as previous measures have already optimized the workforce. - Gianni Papa, Non-Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
