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1. Company Snapshot

1.a. Company Description

Mediobanca Banca di Credito Finanziario S.p.A., together with its subsidiaries, provides various banking products and services in Italy and internationally.The company operates through Wealth Management, Consumer Banking, Corporate and Investment Banking, Principal Investing, and Holding Functions segments.The Wealth Management segment offers asset management and other services to private clients, and affluent and premier customers.


The Consumer Banking segment provides a range of consumer credit products comprising personal loans and salary-backed finances; personal loan services for cars and motorcycles, consumer electronics, furniture, and travel; payment services that include credit cards and salary-backed loans; insurance products; and instalment payment solutions for online purchases.The Corporate and Investment Banking segment offers wholesale banking products and services, including lending, advisory, capital market, and proprietary trading services; and specialty finance services, such as factoring and credit management, as well as non-performing loans portfolio acquisitions and management.The Principal Investing segment engages in the equity investment and holding activities.


The Holding Functions segment engages in treasury, and asset and liability management operations.The company was founded in 1946 and is headquartered in Milan, Italy.

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1.b. Last Insights on MB

Mediobanca Banca di Credito Finanziario S.p.A. faces negative drivers, including a rejected plan to buy Banca Generali, which would have created Italy's second-largest wealth manager. This setback thwarts the bank's attempts to thwart a hostile takeover by Monte dei Paschi di Siena (MPS). The MPS bid, which has reached 62% ownership threshold, may lead to a merger. Additionally, Mediobanca's general manager stated that the take-up in MPS' bid is expected to reach 80%, making a merger inevitable. Shareholders' rejection of the Banca Generali deal raises concerns about Mediobanca's independence.

1.c. Company Highlights

2. Compass Delivers Record Results, Solid Growth Strategy

Compass has reported a stellar year, with a 30% year-over-year increase in net new money to EUR 11 billion, driven by strong corporate and consumer finance trends. Net profit rose 4% and EPS jumped 7% due to share buybacks and robust capital generation. The company's resilient net interest income (NII) growth of 9% was a key highlight, accompanied by a lower-than-expected cost of risk (COR) of 44 basis points. Fees also showed strong double-digit growth, exceeding EUR 1 billion and up 14%.

Publication Date: Aug -09

📋 Highlights
  • Record Net New Money: EUR 11 billion in net new money, a 30% year-on-year increase.
  • Higher Average Loan in CIB: 8% growth in average loan size, reaching EUR 1 billion.
  • Strong Fee Growth: Fees exceeded EUR 1 billion, up 14% year-on-year.
  • Resilient Net Interest Income: NII rose 9%, driven by corporate and Consumer Finance trends.
  • Lower Cost of Risk: COR reduced to 44 basis points, contributing to 4% net profit growth and 7% EPS increase.

Divisional Performance

Wealth Management, Corporate Investment Banking, and Consumer Finance divisions demonstrated remarkable performances, with steady progression in revenue, GOP, and profit. The company's digital investment is paying off, with a strong pricing capability and a net NPL stock of 2.2% in consumer finance. The buy now, pay later initiative is driving growth and new customer acquisition.

Growth Strategy and Guidance

Compass aims to reach EUR 4.4 billion in revenue in three years, up 6%, with recurring EPS expected to reach 2.1%. The company plans to distribute EUR 5 billion in the next three years, with a return on tangible equity (ROTE) of 17% and a Tier 1 capital ratio of 15.5%. For next year, Compass expects another year of growth in a tougher scenario, with a focus on Wealth Management and Consumer Finance, and guidance for EUR 123-125 billion of net new money with EUR 10 billion of net new money.

Valuation

With a P/E Ratio of 14.33 and P/B Ratio of 1.56, the stock appears fairly valued. The Dividend Yield of 5.31% is attractive, and the company's solid growth strategy and robust capital generation support the dividend payout. As CEO Alberto Nicola Nagel stated, "We have delivered a record year, and we are confident in our ability to continue to grow and create value for our shareholders."

Acquisition of Banca Generali

The company is progressing with its plan to acquire Banca Generali, which would transform Mediobanca into a bigger, stronger Wealth Management company. The board is considering August 21 as a possible date for the shareholder meeting to approve the transaction.

Cost of Risk and Capital Generation

The company is guiding for a COR of 55 basis points next year, including the release of half of its orderly provisions. This implies a material increase in COR compared to this year, but it's a prudent assumption, and there is upside potential on the guidance. Compass expects to maintain a strong capital ratio, with a Tier 1 ratio in excess of 14.5%, and plans to distribute EUR 1.4 billion in profit to shareholders.

3. NewsRoom

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MPS board set to discuss investigation on CEO and two shareholders-report

Dec -04

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Is It Time To Reassess Mediobanca After A 215% Five Year Share Price Surge?

Dec -03

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Assessing Mediobanca (BIT:MB)’s Valuation After Its Strong Multi‑Year Share Price Performance

Dec -03

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Mediobanca takeover investigation: Monte Paschi CEO and shareholders under scrutiny

Nov -28

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Italy prioritises MPS-BPM merger to reduce stake in MPS – report

Nov -19

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Financial Services Roundup: Market Talk

Nov -07

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Italy’s Monte dei Paschi Posts Profit Rise Ahead of Mediobanca Integration

Nov -07

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Financial Services Roundup: Market Talk

Nov -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.80%)

6. Segments

Consumer Finance

Expected Growth: 6.2%

The consumer finance segment is expected to grow at a rate higher than the global revenue growth hypothesis due to increasing demand for consumer credit and the company's strong presence in the retail lending market. The growth is driven by the rising need for financial services among individuals.

Corporate and Investment Banking

Expected Growth: 5.5%

The corporate and investment banking segment is expected to grow at a rate slightly lower than the global revenue growth hypothesis due to the competitive nature of the corporate banking market. However, the company's strong reputation and expertise in investment banking are expected to drive growth.

Wealth Management

Expected Growth: 6.0%

The wealth management segment is expected to grow at a rate higher than the global revenue growth hypothesis due to the increasing demand for wealth management services among high net worth individuals. The company's strong expertise in wealth management is expected to drive growth.

Insurance

Expected Growth: 5.8%

The insurance segment is expected to grow at a rate in line with the global revenue growth hypothesis. The company's strong presence in the insurance market and its ability to provide tailored insurance solutions to its clients are expected to drive growth.

Holding Functions

Expected Growth: 0.0%

The holding functions segment is not expected to grow as it is not a revenue-generating segment. However, it is expected to continue to provide support services to the operating segments.

Unallocated Adjustments

Expected Growth: 5.8%

The unallocated adjustments segment is expected to grow at a rate in line with the global revenue growth hypothesis. This is a defensive estimate, as the segment is not a significant contributor to the company's revenue.

7. Detailed Products

Corporate Banking

Mediobanca provides corporate banking services to large and medium-sized companies, including cash management, trade finance, and lending solutions.

Investment Banking

Mediobanca offers investment banking services, including M&A advisory, equity and debt capital markets, and leveraged finance.

Wealth Management

Mediobanca provides wealth management services to high net worth individuals, including investment advice, portfolio management, and estate planning.

Retail Banking

Mediobanca offers retail banking services, including current accounts, credit cards, and personal loans, to individuals and small businesses.

Leasing and Factoring

Mediobanca provides leasing and factoring services to companies, including equipment leasing and invoice financing.

Private Banking

Mediobanca offers private banking services to high net worth individuals, including investment management, wealth planning, and family office services.

8. Mediobanca Banca di Credito Finanziario S.p.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Mediobanca Banca di Credito Finanziario S.p.A. is medium, as there are some alternatives to traditional banking services, but they are not yet widely adopted.

Bargaining Power Of Customers

The bargaining power of customers for Mediobanca Banca di Credito Finanziario S.p.A. is low, as customers have limited negotiating power due to the bank's strong brand and market position.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Mediobanca Banca di Credito Finanziario S.p.A. is medium, as the bank relies on a network of suppliers for its operations, but has some negotiating power due to its size and market position.

Threat Of New Entrants

The threat of new entrants for Mediobanca Banca di Credito Finanziario S.p.A. is low, as there are significant barriers to entry in the banking industry, including regulatory hurdles and high capital requirements.

Intensity Of Rivalry

The intensity of rivalry for Mediobanca Banca di Credito Finanziario S.p.A. is high, as the banking industry is highly competitive, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 70.64%
Debt Cost 6.37%
Equity Weight 29.36%
Equity Cost 9.52%
WACC 7.29%
Leverage 240.59%

11. Quality Control: Mediobanca Banca di Credito Finanziario S.p.A. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Banca Generali

A-Score: 7.3/10

Value: 5.0

Growth: 6.1

Quality: 8.5

Yield: 8.8

Momentum: 7.0

Volatility: 8.3

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Unicaja Banco

A-Score: 7.1/10

Value: 7.5

Growth: 3.4

Quality: 7.1

Yield: 8.1

Momentum: 10.0

Volatility: 6.3

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FinecoBank

A-Score: 7.0/10

Value: 3.6

Growth: 7.8

Quality: 8.8

Yield: 6.9

Momentum: 8.0

Volatility: 7.0

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Banca Sondrio

A-Score: 6.8/10

Value: 6.7

Growth: 4.9

Quality: 6.1

Yield: 8.8

Momentum: 9.5

Volatility: 5.0

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BPER Banca

A-Score: 6.7/10

Value: 6.6

Growth: 5.2

Quality: 6.2

Yield: 8.1

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Mediobanca

A-Score: 6.7/10

Value: 5.5

Growth: 5.1

Quality: 7.1

Yield: 10.0

Momentum: 6.5

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

-24.65$

Current Price

16.27$

Potential

-251.56%

Expected Cash-Flows