Italy's Banco BPM to grow investor payback as rates decline (updated)
12/12/2023 08:08
(Recasts throughout with details)
By Andrea Mandala
MILANO, Dec 12 (Reuters) -
Italy's Banco BPM BAMI.MI on Tuesday pledged to moderately
grow profits through 2026 as net fees offset declining interest
rates, allowing it to increase five-fold its payback to
investors versus with the past four years.
Born in 2017 from the merger of two regional cooperative
banks and rooted in Italy's wealthy Lombardy region, Banco BPM
is Italy's third-biggest bank, whose main investor is France's
Credit Agricole CAGR.PA , with a 9.2% stake.
Banco BPM will return 4 billion euros ($4.3 billion) to
investors by 2026, starting with 1.3 billion euros in dividends
next year and, subsequently, deciding on a yearly basis how to
split the payback between dividends and share buybacks.
Higher rates have driven Italian banks' profits to
record levels this year, allowing lenders to boost shareholder
remuneration.
With rates expected to start declining in 2024, banks are
looking to replace income from lending with that from businesses
such as wealth management and insurance.
Banco BPM aims to make net fees its main profit driver,
growing them 5% annually on average in 2023-2026.
Committing also to increase by a fifth managerial
positions held by women by 2026 and hire hundreds of cyber and
data specialists, Banco BPM forecast a 2026 net profit above 1.5
billion euros versus 1.2 billion in 2023.
CEO Giuseppe Castagna said in a statement the bank would
reap the benefits of its commercial partnerships "in an economic
environment that presumably, as early as 2024, could see a
reduction in interest rates".
A year ago, Banco BPM expanded its partnership with
Credit Agricole CAGR.PA - previously focused only on consumer
credit, to include a long-term 'bancassurance' deal in non-life
products.
In July this year the Milan-based lender struck a
partnership in payments with domestic private equity fund FSI
and rival banking group ICCREA with a view to creating the
country's second largest player in the sector.
In asset management, Banco BPM is the biggest investor
in Anima ANIM.MI with a 21.7% stake.($1 = 0.9277 euros)
(Reporting by Andrea Mandalà; Editing by Valentina Za)
((andrea.mandala@thomsonreuters.com; +390680307738;))