Il title di Monte dei Paschi di Siena flies to Business Square (+10% at opening) after financial results sharply superior expectations. In the first half of 2024, under the leadership of CEO Luigi Lovaglio, the bank recorded a net profit of 1,159 billion euros, almost doubled compared to last year. In the second quarter alone, net profit reached 826,5 million euros. Revenues and net interest income also exceeded forecasts, while the CET1 Ratio remained solid at 18,1%. Following these results, MPS has improved its forecasts and launched a new Industrial Plan for 2024-2028, which involves significant investments and a strengthening of its position in the market.
Results for the first half of 2024
In the first half of 2024, MPS recorded revenues total amounting to 2,031 billion euros, an increase of 9,7% compared to the same period of the previous year. The interest margin reached 1,172 billion euros, with an increase of 8,3% (+89,4 million euros) compared to the first half of 2023. Net commissions rose to 736 million euros, marking a growth of 9,8 % compared to last year.
THEprofit for the period attributable to the Parent Company was 1,159 billion euros, an impressive increase of 87,3% compared to 619 million euros in the same period of 2023. Of this profit, 827 million euros were achieved in the second quarter of 2024 , thanks also to a positive net fiscal effect of 457 million euro.
Second quarter 2024 results
In the second quarter, MPS achieved a Net income of 826,5 million euros, greatly exceeding analysts' forecasts, which were set at 378,2 million. THE revenues of the second quarter reached 1,02 billion euros, exceeding expectations of 981,5 million and marking an increase of 4,7% compared to the same period of the previous year.
Il net interest margin for the quarter was 585,2 million euros, up 1,2% compared to the previous year and higher than the forecast of 575,9 million. The net commissions they totaled 370,5 million euros, an increase of 9,5% compared to last year, beating the forecast of 354,3 million. Provisions for loan losses amounted to 98,3 million euros (+0,6%), lower than expectations of 118,8 million.
Costs and impaired loans
I Costs operational they reached 925 million euros, with an increase of 1,2% compared to the previous year. However, non-HR cost optimization (-6,7% year-over-year) partially offset the increase in HR costs (+5,9%) due to the new national contract. The cost/income ratio for the half-year was 46%, improved compared to 49% at 30 June 2023. stock of non-performing loans gross is equal to 3,7 billion euros, with a gross NPE ratio of 4,6% and a net NPE ratio of 2,4%. There coverage overall of impaired loans increased to 49,8%, an increase of 70 basis points compared to December 2023.
MPS's 2024-2028 Industrial Plan
The MPS Board of Directors has approved a new Industrial Plan for the period 2024-2028, updating financial targets and strategic guidelines. The plan aims to strengthen the bank as a “Clear and Simple Commercial Bank” through a digital transformation and greater specialization of the service model.
The Industrial Plan is structured around five main pillars:
- Evolution of the proposal for "fee-based" products and services.
- New service models for high added value activities.
- Strengthening the offering of financing products for families and developing new verticals for small and medium-sized businesses.
- Platform renewal and optimization.
- “Zero-based” approach to risk management.
The plan provides investments totals of 500 million euro in the period 2024-2028, divided into 420 million euros for Change Capex and 80 million euros for Run Capex. Furthermore, the inclusion of approx 800 new resources with skills in IT and Advanced Analytics/GenAI.
MPS improves the outlook and increases the payout ratio
THEpre-tax profit is expected to grow from 1,3 billion euros in 2024 to 1,42 billion euros in 2026, reaching 1,66 billion euros in 2028. revenues Business, including interest margin and net commissions, are expected to contract slightly between 2024 and 2026 (-14 million euros), but are expected to expand by approximately 260 million euros between 2024 and 2028. cost/income ratio it is expected to remain almost stable, from 49% in 2024 to 51% in 2026 and 50% in 2028, thanks to cost containment initiatives. The cost of risk is expected to decline significantly, from 54 basis points in 2024 to 44 basis points in 2026 and 34 basis points in 2028.
Il CET1 Ratio fully loaded it was confirmed at 18,1%, at the top of the banking system, including the profit of the first half net of dividends and with a payout ratio increased to 75%, compared to the 50% of the previous guidance.
The bank expects that the CET1 Ratio remains above 18% for the entire duration of the plan, with an expected excess capital exceeding 2 billion euros in the period 2025-2028, compared to the CET1 Ratio target of 14%. This surplus capital offers MPS the possibility "to pursue various strategic alternatives aimed at creating value", explains a note.
