Italy's Banco BPM to grow investor payback as rates decline (updated)
12/12/2023 11:32
(Fixes typo in paragraph 2)
By Andrea Mandala
MILAN, 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 compared with the past four
years.
Presenting its 2023-2026 business plan to analysts, the bank
said it would return 4 billion euros ($4.3 billion) to investors
by 2026, equal to more than 50% of its market capitalisation.
The new shareholder remuneration policy will start with
1.3 billion euros in dividends next year and thereafter the
lender will decide on a yearly basis how to split it between
dividends and share buybacks.
Born in 2017 from the merger of two regional cooperative
lenders 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 said the increased shareholder remuneration will
not affect its core capital position, which is seen stable at
14% at the end of the plan.
Its shares were up 2.3% at 1030 GMT, against a flat Italian
banking sector overall .FTITLMS3010 .
Italian broker Equita said in a recent note it expected a
total 3 billion euros on distribution over the next three years.
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.
Banco BPM plans to shed 1,600 workers through a redundancy
incentive plan to be activated in 2024, hiring 800 young people.
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 and Gavin
Jones and)
((andrea.mandala@thomsonreuters.com; +390680307738;))