Even the accounts of Monte Paschi Bank they are good and with to evaluate consistent, however, mostly due to the dynamics of therate increase officials. And even MPS, as Intesa Sanpaolo and Unicredit did, has decided to allocate the profits to strengthening its assets, thus avoiding paying the cups on extra profits, in its case, to its main shareholder, the same Italian government which controls 64% of the bank.
Il management he is satisfied with the progress made and believes that in the future the bank will be able to be sustainably profitable, so much so that it will be able to review the guidance and be able to adequately remunerate shareholders. The title today a Business Square loses ground and is listed in the late morning at 2,54 euros, down by 1,93%.
Profits in 9 months close to one billion, compared to the red of a year ago
Rocca Salimbeni closes the first nine months of 2023 with revenues totaling 2.804 million euros, an increase of 22,9% compared to the same period of the previous year. The useful reached 929 million of euros compared with one loss of 334 million of the same period as 2022. Only in third quarter profits, mainly the result of the dynamics of the ECB rate hike, reached 310 million, exceeding analysts' expectations, while revenues amounted to 953 million, slightly down (-2,0%) compared to the previous quarter due to the lower contribution of financial management.
Interest margin rises sharply, commissions fall
Il interest margin (the difference between the interest paid to the bank by customers for loans and that which the bank pays for current accounts) rose 62% to 1,67 billion euros. Instead, revenues from Commission (-6,5%) to 986 million and those from financial activities (- 23%). Also decreasing Costs while the staff reduction plan proceeds. A note from the bank comments that the dynamics of the accounts "is attributable to the growth of the interest margin, which benefits, on the lending front, from the favorable interest rate scenario, in a context of careful monitoring of the cost of funding. The positive trend in the interest margin more than offset the decline in net commissions."
Lovagno: MPS will be sustainably profitable
In the call with the financial community that followed the publication of the results, the CEO Louis Lovaglio expressed satisfaction with the rebirth of the Bank. “Mps did it impressive progress over the last 12 months and today we present solid results, which demonstrate the improvement of the business” he said. “We are now one of the best banks in Italy, with a capacity of be sustainably profitable and to generate capital organically quarter on quarter. We are solid and well equipped to compete in the market."
Net profit guidance for 2023 increased to over 1,1 billion
Core revenue growth supported a 2x higher year-over-year EBITDA, with rising revenues and lower structural costs, leveraging a strong loyal customer base. The cost of risk is at 52 bps, confirming the year-end guidance of 55 bps. “Net profit guidance for 2023 it has been increased to over 1,1 billion euros, driven by net interest income, with an expected year-end CET1 ratio above 17%,” the CEO said.
MPS well equipped to remunerate shareholders
On the remuneration front, the CEO explained that MPS has "a large buffer on capital requirements and this reassures us that we will be well equipped to remunerate our shareholders in line with the latest guidance we have given, i.e. bringing forward the dividend with the 2024 profit”.
Pressed by analysts on possible advances in capital distribution, the CEO said: “We are happy to have a solid capital position, which we know is very high and superior to the needs we have to develop the business. During the fourth quarter, looking at the full year results, we will study an appropriate policy, taking into account possible positive developments that could have an effect. However, it is now too early to give details on how we will use the excess capital, we will talk about it with the annual results."
The CEO then explained that “the net profit was driven by a strong operating performance supported by the growth of the NII and the reduction of structural costs mainly linked to the 4.000 voluntary early retirements last year”. The NII “was also on the rise in this quarter by +4,6% leading to growth of +62,7% y/y after 9 months, driven by a further improvement in the spread to 3,40% (+162 bps ) thanks to the increase in the lending rate and the consciously managed pass through”.
Litigation decreases by 1,2 billion
Following the ruling of Court of Cassation, that acquitted the former leaders Giuseppe Mussari and Antonio Vigni in the derivatives trial, MPS downgraded the risk relating to some legal proceedings and out-of-court requests from "possible" to "remote". Consequently, we read in a note, lthe total amount of litigation and out-of-court requests for financial information released over the period 2008-2015 it decreased from 4,1 to 2,9 billion. Furthermore, all out-of-court claims notified to the bank after 29 April 2018, in accordance with the provisions of the Supreme Court, "are to be considered time-barred". “Most out-of-court actions are brought by the same consultancy firm on behalf of institutional investors, in most cases characterized by lack of documentation, lack of legitimacy and causal link,” the CEO said.
MPS will not pay taxes on extra profits, 313 million will support the assets
MPS will not pay the extra profits tax, and will set aside 312,7 million. The latest version of the law allows it: institutions have the possibility of allocating the sum to strengthening their assets and MPS will also do the same, as did Intesa Sanpaolo and Unicredit.
