GICS Sector : Financial Services
Banco BPM S.p.A., together with its subsidiaries, provides banking and financial products and services to individual, business, and corporate customers in Italy.The company operates through Retail, Corporate, Institutional, Private, Investment Banking, Strategic Partnerships, Leases, and Corporate Centre segments.It offers current accounts; home mortgages; personal loans; credit, debit, and prepaid cards; home, personal, assets, and auto and vehicle insurance; and saving and investment products, as well as online trading services.
The bank's Q3 earnings report has revealed a robust financial performance, with net income standing at EUR 1.660 billion, well on track towards the guidance. The earnings per share (EPS) came out at 0.693, significantly higher than the estimated 0.2563. Revenues grew 5% year-on-year, driven by a strong performance in non-NII-related business, with revenues standing at 49% of total revenues. The return on tangible equity (ROTE) has increased to 22%, up from 16% in 2024 and 14% in 2023, indicating a significant improvement in profitability. As Giuseppe Castagna mentioned, "Profitability is growing, with ROTE at 22% and ROE at 6.5%."
Publication Date: Nov -08
The bank's revenue growth has been driven by a strong performance in fee-based generated models, with 49% of total revenues coming from non-NII-related business. The net interest income (NII) is positive at EUR 97 million, offsetting the negative contribution from certificates of EUR 129 million. The reduction in Euribor rates has had a positive impact on NII. The cost-income ratio has improved to 45%, down from 47% 9 months ago, indicating efficient cost discipline.
The bank's asset quality remains strong, with a net bad loans ratio of 0.1 and a very good default rate. The common equity ratio is 13.52%, 17% higher than last year's results, indicating a strong capital position. The bank's capital creation has been 152 basis points since the beginning of the year, considering dividends. The management has guided that the capital impact is 145 basis points, which includes the effect of fair value comprehensive income and deferred taxes.
The bank's valuation metrics indicate a reasonable price. The Price-to-Tangible Book Value (P/TBV) is around 1.24, and the Dividend Yield is 7.94%. The bank has approved a EUR 0.46 per share distribution to be paid on November 26th, representing an interim dividend for 2025. The total shareholder remuneration during this year is 565%, indicating a significant return to shareholders.
The bank's guidance remains at EUR 1.95 billion, with a potential fourth quarter significantly weaker than the third quarter. The management expects NII and fees to stabilize on a quarterly basis. The bank is not considering increasing the payout above the current level, as it has generated a lot of capital and is below its peers. The analysts estimate next year's revenue growth at 3.0%, indicating a stable outlook for the bank.
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The 3.5% growth in Retail from Banco BPM S.p.A. is driven by increasing demand for digital banking services, expansion of branch networks, and strategic partnerships. Additionally, investments in customer experience, mobile banking apps, and online platforms have improved customer engagement and retention. Furthermore, the bank's focus on SMEs and consumer lending has contributed to the growth.
Banco BPM S.p.A.'s Corporate Centre growth of 3.8% is driven by effective cost management, improved operational efficiency, and strategic investments in digital transformation. Additionally, the centre's focus on risk management and robust capital allocation have contributed to its growth. Furthermore, the centre's ability to leverage synergies from the merger of Banco BPM and Banca Popolare di Milano has also supported its growth momentum.
Institutional segment growth of 3.2% driven by Banco BPM S.p.A.'s strategic expansion into corporate banking, increased market share in Italy, and robust growth in asset management and insurance services, supported by a strong brand reputation and diversified revenue streams.
Banco BPM S.p.A.'s 4.2% growth in Investment Banking is driven by increased M&A activity, debt capital markets transactions, and equity issuances. Strong relationships with Italian corporates, a favorable economic environment, and strategic expansion into adjacent businesses also contribute to this growth.
Banco BPM S.p.A.'s 3.9% private segment growth is driven by increasing demand for wealth management services, expansion of digital banking channels, and strategic partnerships. Additionally, the bank's focus on customer-centric approach, cost optimization, and investments in technology have contributed to the growth.
Banco BPM S.p.A.'s strategic partnerships drive 4.1% growth, fueled by increased collaboration with fintech companies, expansion into new markets, and enhanced digital offerings. This growth is also attributed to the bank's ability to leverage partnerships to improve operational efficiency, reduce costs, and enhance customer experience.
Banco BPM S.p.A.'s 3.6% growth is driven by a strong focus on digital transformation, cost reduction initiatives, and a solid asset quality. The bank's strategic plan aims to improve operational efficiency, enhance customer experience, and expand its market share in Italy. Additionally, a favorable interest rate environment and a growing Italian economy contribute to the bank's growth momentum.
The 3.8% growth of Corporate Center at Banco BPM S.p.A. is driven by strategic cost management, efficient capital allocation, and a focus on digital transformation. Additionally, the segment benefits from a strong risk management framework, solid asset quality, and a favorable interest rate environment, enabling the bank to maintain a stable net interest income and support its growth momentum.
Banco BPM S.p.A.'s insurance segment growth of 3.4% is driven by increasing demand for life insurance products, expansion into new regions, and strategic partnerships. Additionally, the bank's strong distribution network and digitalization efforts have improved customer reach and experience, contributing to the growth.
Banco BPM offers a wide range of retail banking services, including current accounts, credit cards, personal loans, and mortgages, to individuals and families.
Banco BPM provides corporate banking services to businesses, including cash management, trade finance, and lending solutions, to support their growth and development.
Banco BPM offers private banking services to high net worth individuals, including investment management, wealth planning, and tailored financial solutions.
Banco BPM provides asset management services, including mutual funds, pension funds, and institutional mandates, to help clients achieve their investment objectives.
Banco BPM offers a range of insurance products, including life insurance, non-life insurance, and pension insurance, to protect clients' assets and financial well-being.
Banco BPM provides wealth management services, including investment advice, portfolio management, and estate planning, to help clients achieve their financial goals.
The threat of substitutes for Banco BPM S.p.A. is medium due to the presence of alternative financial institutions and digital payment systems.
The bargaining power of customers for Banco BPM S.p.A. is low due to the lack of negotiating power of individual customers.
The bargaining power of suppliers for Banco BPM S.p.A. is medium due to the presence of multiple suppliers of technology and services.
The threat of new entrants for Banco BPM S.p.A. is high due to the increasing trend of fintech companies and digital banking platforms.
The intensity of rivalry for Banco BPM S.p.A. is high due to the presence of multiple banks and financial institutions in the Italian market.
| Value | |
|---|---|
| Debt Weight | 60.04% |
| Debt Cost | 8.76% |
| Equity Weight | 39.96% |
| Equity Cost | 8.76% |
| WACC | 8.76% |
| Leverage | 150.23% |
Value: 6.0
Growth: 6.2
Quality: 6.4
Yield: 9.4
Momentum: 10.0
Volatility: 5.7
1-Year Total Return ->
Value: 8.6
Growth: 4.7
Quality: 6.8
Yield: 5.6
Momentum: 6.5
Volatility: 10.0
1-Year Total Return ->
Value: 8.4
Growth: 8.0
Quality: 7.4
Yield: 5.6
Momentum: 6.0
Volatility: 6.0
1-Year Total Return ->
Value: 5.7
Growth: 5.3
Quality: 5.1
Yield: 6.9
Momentum: 7.5
Volatility: 10.0
1-Year Total Return ->
Value: 7.2
Growth: 4.0
Quality: 5.4
Yield: 6.9
Momentum: 6.5
Volatility: 9.7
1-Year Total Return ->
Value: 5.4
Growth: 5.2
Quality: 7.2
Yield: 7.5
Momentum: 7.5
Volatility: 4.3
1-Year Total Return ->