Mediobanca, closed the fourth quarter 2023, which is the second of the 23/24 financial year for the institution, with 866,9 million revenues (839,4 million estimated by the Bloomberg consensus) and a net profit of 259,9 million, above the 257,2 million expected by analysts. In the second semester profits were 611,2 million, which represents a historical record for the period. The attention of the credit institution led by CEO Alberto Nagel for the months to come is on the management of savings and assets, the coordination between wealth management and corporate and investment banking, the reduction of risk-weighted assets by freeing capital and for the stability of commissions over time.
The bank highlights “robust capital generation,” with a Cet 1 coefficient at 15,3%, and confirms “growing shareholder remuneration”, with 70% cash payout "to which will be added the completion of the execution of the share buyback plan for 200 million". In May a will be paid interim dividend, the amount of which is yet to be decided.
A Business Square the Mediobanca stock by 1,44% to 11,67 after an opening up by 0,7% for 10,13 billion in capitalization while the Ftse Mib is up by 0,10%.
In the half-year, earnings per share were 0,72 euros, +10% on the year
In the six months ended December 31, 2023, revenues stood at 1,730 billion (+4,3% year on year) thanks to a jump in interest margin driven by high rates for 996,5 million (+18,2%), the gross result closed at 842,2 million (+12,1% year on year) and the net profit at 611,2 million (+10 %).
The eps (earnings per share) in the six months stood at 0,72 euros (+10% year on year), profitability (Rote) at 13,3% (+60 basis points compared to June) in an operating context still uncertain due to geo-political events and macroeconomic dynamics, but which at the end of the year recorded a positive performance in the main financial markets, fueled by expectations of an easing of monetary policy. The results represent a solid start to the new One Brand-One Culture Plan.
Expectations for the next six months
Mediobanca sees the'financial year 2023-2024 “jointly growth compared to the previous". Revenues "are expected to confirm the growth rate expected in the plan (three-year average annual growth of 5%)", while "net profit is expected to develop after growing operating costs for the initiatives connected to the plan, but always at an index stable costs/revenues”. The cost of risk is "confirmed normalization at pre-Covid levels in consumer credit and in the 55 basis point area at group level". The goal for June 2026 is for revenues of 3,8 billion, Rote 15%, eps 1,80.
CEO Nagel: record half-yearly profit over 610 million
In the note Nagel underlined that “the group has started positively the 2023-24 financial year, laying solid foundations for the development of the Plan's initiatives, achieving excellent results in terms of value-oriented and low capital absorption growth. The group achieved an all-time record of half-yearly net profit (over 610 million), reducing weighted assets by over 2 billion, bringing the Rote over 13%. Looking at the next months, the main businesses will benefit from a favorable positioning in a phase of inversion of the interest rate cycle and from the new strategic initiatives aimed at implementing the vision of the One Brand-One Culture Plan which sees the Group establish itself as a Wealth Manager".
Possible remuneration of over 10% for shareholders. The interim dividend in May
The bank confirms the remuneration of shareholders with a payout ratio of 70% cash, to which the completion of the execution of the plan will be added buyback of own shares for 200 million. The 2024 interim dividend will be paid to May 2024. “Shareholder compensation has grown and we will pay our first interim dividend in May 2024 with the second part in November 2024”, underlined the CEO of Mediobanca, Alberto Nagel, in the conference call presenting the data. “We also have an ongoing buyback on approximately 2% of the capital", recalled the manager, underlining that Mediobanca is "perfectly on track to achieve the plan objectives" and is growing "regardless of the interest rate scenario". Growth, he added, “is strong and very efficient in terms of capital generation and absorption.”
“Our goal of value creation is respected, this year we will have to have a 20% growth in earnings per share, compared to the average +14% over the three-year period,” added Nagel during the call. “The bank is strongly capitalized and it continues to generate a lot of capital, we think we're generating 200 basis points of capital against 165 last year. With this pace of revenue and capital generation the possible distributions to shareholders they are of great interest and are located in a annual return greater than 10%”(of total yield, dividend plus buyback).
The greatest contribution to profit comes from insurance
It was the industry insurance the one that contributed most to the growth of the profit for 223,4 million (this is mainly the participation in Generali), but also the activities of consumer finance (consumer credit) for 194,1 million, followed by Corporate and investment banking (108,3 million) and the Wealth Management (100,2 million), while the Holding Functions (treasury and central functions) saw a -13 million.
As is known, last January 15th there was the rebranding of CheBanca! then Mediobanca Premier, "an important pillar of the 23-26 Plan" says the institute in a note "from which a significant contribution to the growth of the group is expected (around 10 billion in greater TFA, Total Full Asset in the period from June 23 to June 26)".
Risk-weighted assets reduced by over 2 billion
Mediobanca has also taken steps to structurally reduce the weighted assets for the risk so you have to absorb less capital. In this sense, TFA (Total Full Assets, i.e. managed, administered and liquidity savings) rose by 5,5 billion in the six months to a total of 94 billion (+4,4 billion on the previous quarter), driven by asset inflows under Management and Asset under Advisory (4,2 billion) which reach 66 billion (+21% annual). Deposits (27,7 billion) were essentially stable over the period. The thoughtful activities for risk (Rwa) they are down by over 2 billion in the half year and by almost 3,5 billion in the twelve months «due to the selective dynamics of loans (-3% annual with the CIB at -11%, Consumer finance +4% and Wealth Management +3%) and for the start of risk mitigation measures of the CIB” (investment banking).
Cost/income at 42%, cost of risk down to 51 basis points
Il cost/income ratio remains low and stable (year-on-year at 42%). The quality of the assets includes high overlays (245 million). The group cost of risk stood at 51 basis points (57 points in the last quarter). The impaired assets gross result slightly decreasing “for the sale of two highly hedged corporate positions (2,4% gross and 0,8% net of total loans)”, while loans classified as Stage 2 increased slightly over the quarter (5,9% gross and 5,3. XNUMX% net). The coverage ratios remain high: 69% for impaired assets, 1,41% for performing loans and 3,74% for performing loans in the Consumer finance sector.
Arma Partners: 24 million in revenues in three months
During the first half of the year, the acquisition of Arma Partners, financial consultancy company specialized in the Digital Economy, which represents "a fundamental piece in the implementation of the Plan as it will contribute to 40% of the growth of CIB (Corporate Investment Banking) revenues in 23-26 and will favor its geographical diversification", explains Mediobanca.
The boutique confirms itself as "among the main advisors in Europe in the digital economy sector with over 15 operations announced since July 2023 and has contributed 24 million to the division's revenues in three months".
