Mediobanca archives the 2016-2017 financial year, which ended last June, with a Net income up 24%, to 750 million euros, well beyond the consensus of analysts, which stopped at 720 million. In detail, profits exceeded 250 million in the Corporate and Investing Banking (+14%, to 254 million) and Consumer-Compass (+68%, to a record 258 million) divisions.
Il general operating result is up 16% to 855 million. The institute specifies that the numbers were affected by "the positive dynamics of revenues and the continuous reduction in the cost of risk in all business lines". The turnover it rose 7,3%, to 2,2 billion, and is "the highest ever". The higher revenues were contributed by the former Barclays branch with 83,8 million, the activity of Cairn for 12 months instead of the previous six and that of Banca Esperia for the last quarter at 100% instead of 50%.
Il dividend per share proposed is 0,37 euro, an increase of 37% compared to the previous year (0,27 euro), with an increase in the payout from 38% to 43%.
Il cost of risk drops to 87 basis points (-37 bp), "a clear improvement compared to the targets of the plan". The equity indices are strengthening, rising to the "major post-crisis levels". In particular, the Cet 1 rose to 13,3% from 12,1% and the Total Capital Ratio to 16,9% from 15,3%.
La General share it contributed 264 million euro to Mediobanca's financial statements (equal to 13%), +3% compared to the previous year. During the year, securities for around 340 million were sold, with profits of 162 million. Mediobanca also confirms its commitment to reduce Generali to 10% by 2019.
The stake in Generali, said the CEO Albert Nagel in conference call, "continues to be crucial" for the generation of capital and profits of Mediobanca, which remains in "total support" of the company "from a development point of view. If our risk-weighted asset growth required more capital than the bank produces”, the management, before asking for capital from the shareholders, would “mobilize” the group's resources, which includes the stake in Generali.
With regard to the 6,2% stake held in RCS, Mediobanca maintains "an open" and "flexible attitude", waiting to see the evolution of the company under the leadership of Urbano Cairo. “That in RCS is a small stake for us, it doesn't change the numbers to keep or sell it. We have an open attitude. Let's evaluate – continued Nagel, questioned during a conference call on the intentions with regard to the share, considering that on the Stock Exchange it is worth 1,3 euros compared to the 1,2 euros of the entry price for the bank – The conversation we have with Urbano as shareholders makes us think that the company has better prospects, so we have a flexible attitude. We are oriented towards understanding the evolution of the company to understand if our sales target can be revised upwards”.
Finally, from the sale of the stake in Atlantia – which will benefit the accounts for the first quarter of the 2017-18 financial year – Mediobanca expects a capital gain of 70-80 million. Nagel said it again, specifying that the bank's income statement will continue to record capital gains this year "because we will continue to sell assets available for sale". In the third quarter of the 2016-17 financial year, Mediobanca sold the residual 1,35% of Atlantia it held on a forward basis, thus eliminating its stake. The delivery of the securities and the effects on the income statement will fall in the third calendar quarter of 2017, i.e. the first quarter of Mediobanca's 2017-18 financial year. During 2016-17, AFS shares in Principal Investing decreased from 851,9 million to 659,5 million as a result of sales of 336,7 million, with capital gains totaling 161,6 million, which covered half of the Atlantia package (110 million), 5,1% of Koening & Bauer (28 million) and 2,8% of Italmobiliare (22 million) as part of the buyback promoted by the company.
Mid morning Mediobanca shares on the Stock Exchange it dropped 0,5%, to 8,96 euros.
CHEBANCA DOUBLE IN SIZE AND TRIPLE INCOME WITH EX-BARCLAYS
CheBanca doubled in size and tripled profit after acquiring Barclays Italia assets a year ago. As indicated in the press release on the Mediobanca group's operating accounts, CheBanca closed 2016-17 with a net profit of 27 million euro against 8,5 million in the previous year.
Revenues increased by 43% to 274,6 million, with a contribution from the new branch of almost 84 million. The interest margin rose by 38% to 205,3 million due to higher volumes and the drop in the cost of funding, while commissions grew by almost 60%, to 69 million, due to the development of indirect funding. At the same time, structural costs increased by 46% to 237,0 million, essentially due to the former Barclays branch which accounts for 75,2 million.
Direct deposits grew from 10,7 to 13,4 billion, indirect deposits from 3,9 to 7,1 billion and benefited from the ex-Barclays contribution of 2,9 billion and 2,8 billion respectively. Loans also increased (from 5,1 to 7,5 billion), to which the former Barclays branch contributed 2.459,6 million (22.885 mortgages), against disbursements of 1.240,9 million (+15,5%) .
The year – underlines the press release – marked for Chebanca “the definitive transformation into a wealth manager dedicated to the affluent & premier Italian customer segment”. The bank with the former Barclays branch has doubled in size by integrating 141 branches and 800 customers, managed since the end of May with a single IT system.
A new trading platform has been outlined. Starting next year, cost and revenue synergies are expected, with the rationalization and integration of the structures which provides for the closure of 33 branches and the reduction of the workforce (110 people in addition to the 127 voluntary exits in 2016-17), whose costs are fully covered by the funds already allocated. The network of financial advisors is also being developed with around 100 hires per year compared to the current 70.
