"The due diligence was successfully concluded” on the merger between Bpm and Banco Popolare. The institutes communicated it last night in a note.
"I have no doubts that the merger operation with Bpm will be closed - declared the CEO of Banco Popolare, Pier Francesco Saviotti – is the most beautiful operation that the banking system has seen in the last ten years. It is following its path, we have finished the due diligence, we will present the business plan next week".
Meanwhile, Banco Popolare closed the first quarter of 2016 with a net loss attributable to the parent company of 313,6 million euro, against a year ago net profit of 208,8 million. The loss for the period without Fvo amounted to 323,6 million. Revenues amounted to 786 million, down 17,6% compared to the same period of 2015. Direct deposits rose to 82,7 million (+0,6% from December 2015) and loans to 85,5 million .
Net of the effect relating to market performance, indirect deposits (69,8 billion) would also have recorded an increase compared to December 2015, while they fell by 1,8%. The negative performance in the first quarter is due to the fact that in view of the merger with Bpm, the bank raised the level of coverage of non-performing loans as required by the ECB and as a result net adjustments rose to 684 million from 181 in one year does.
THEshare capital increase of one billion of Banco Popolare it will be realized "everything with the right of option" also because "we thought it appropriate to close quickly, while if we had decided to split it in two we would have had to do one part immediately and another maybe in mid-September - added Saviotti -. We have decided to try to do everything immediately and our intention, if we are able to satisfy all the requests of Consob on the necessary documentation, is that it should be completed by the end of May, very first days of June".
As for Bpm closed the first quarter with a net profit down by 28,5% to 48,3 million euros, but above the consensus of analysts. The result reflects the lower contribution of financial assets which recorded a drop of 77% to 13,5 million. The interest margin showed an increase of 5,3% to 206,5 million and net commissions an increase of 2% to 151,3 million.
Overall, therefore, the bank recorded operating income down by 8,6% to 389,1 million. Operating expenses also grew: +3,2% to 252,4 million where the contribution to the single resolution fund also weighed. In terms of credit quality, net non-performing loans fell by 2,2% to 3,6 billion (-0,2% on the previous quarter).
Net non-performing loans also show a reduction in the incidence on loans to 10,6% compared to 11,3% in March 2015 and substantial stability compared to the end of 2015. The overall degree of coverage of non-performing assets stands at 40,1, 50%, up by 2015 basis points from the end of 180 and by 2015 basis points compared to March 1. As regards capital solidity, the Cet11,64 stands at 12,32% and at XNUMX% at the fully phased level.
Bpm's results were slightly higher than the Bloomberg consensus which indicated a net profit of 47,8 million. The institute underlines how the positive trend in volumes continued in the first quarter with a +4,9% of loans to customers to 34,2 billion. Direct deposits amounted to 37,3 billion, a slight decrease (-0,8%) compared to the end of 2015. "The quarterly reduction - explains Bpm - is due to the decrease in retail and institutional securities, while the positive trend is confirmed of sight collection".
Indirect deposits from customers amounted to 33 billion and recorded a decrease of 3,1% compared to the end of 2015 and 5,3% on the same period last year. This trend is mainly due to the good performance of assets under management (-0,2% on the previous quarter to 20,8 billion) while market volatility made itself felt on the trend of assets under administration (-7,6% to 12,2, XNUMX billion).
In terms of credit quality, Bpm shows a 37,4% drop in gross flows of entry into non-performing positions compared to last year. As regards net non-performing loans, the drop was 2,2% to 3,6 billion. The 3,6% increase in non-performing loans was in fact offset by the reduction in probable defaults (-2,5%) and past due exposures (-31,1%). The group's liquidity position remains robust, with a significant amount of free eligible assets of €5,6 billion and a net spot liquidity balance of around 11,1% of total assets
As for expectations for 2016, the bank emphasizes that in the coming months the institute will be engaged "in the activities that will become necessary and appropriate in the development of the project" of integration with Banco Popolare. As for the operational management of the bank, the institute "should confirm, especially in the corporate sector, an increase in volumes, despite the increased competitive pressure", explains Bpm. “On the funding front, the recomposition towards demand forms to replace maturities and greater recourse to TLTROs is expected to continue, with a consequent cost reduction which will help to contain the erosion of the gap between lending and deposit rates”.
