The market welcomes MPS's accounts: the share rises by 3,4%, to 0,2272 euros per share, despite the fact that the accounts have revealed a higher red than expected and while the conference call with analysts has just ended. Rocca Salimbeni closed 2013 with a loss of 1,43 billion euros, which compares with the loss of 3,16 billion recorded in 2012. In the fourth quarter of last year alone, the result was a loss of 920 million.
The benefit of the valuation of the stake in the Bank of Italy, explains the Bank, amounted to 187,5 million euros before tax recorded in the income statement in the fourth quarter of 2013 under the item Profit/loss on the sale of financial assets available for sale. However, investigations are underway by the competent authorities and a different interpretation of the Ias/Ifrs accounting standards could emerge with respect to the approach adopted.
These insights could lead to the recognition of the valuation benefit in equity and not in the income statement with a negative effect in this case on the net result for the year of 165 million euro, while the fully phased Basel 1 Cet3 ratio would remain unchanged at approximately 9%.
Loan adjustments weighed on the accounts for an amount of 2,75 billion, of which 1,21 billion between October and November. The percentage coverage of non-performing loans stood at 41,8% at the end of the year, up on the previous year (+80 basis points year on year), with the coverage of non-performing loans equal to 58,8% (+90 points). Including depreciation, the coverage of total non-performing loans rose to 45,7% and that of non-performing loans to 63,2%.
The interest margin fell by 23,9%, influenced by the cost of Monti bonds and the deleveraging implemented by the bank. In the fourth quarter, however, the trend was positive, +11,2% quarter on quarter above all as a result of managerial actions to contain the cost of funding. The Monti bonds for 4 billion had a negative impact on the interest margin for 162 million.
"The window to launch the capital increase opens on May 13 and the conditions established with the guarantee consortium remain unchanged", said CEO Fabrizio Viola during the conference call with analysts in the morning. To repay the Monti bond, MPS must launch, as foreseen in the agreements with Brussels, a capital increase of 3 billion euros. In the tug of war with the Foundation, the Bank's main shareholder but committed to finding buyers to sell part of its stake and thus put its finances in order, the meeting postponed the window for the increase compared to what was initially established by the management (at the beginning of 2014).
One of the unknown factors regarding this postponement was represented not only by the conditions of the markets and by the engorgement of increases by other banks, but also by the confirmation or otherwise of the underwriting syndicate. The bank confirmed that the consortium has renewed the pre-underwriting agreement. The increase will therefore be guaranteed by the same consortium led by Ubs as before. In detail: Ubs as global coordinator and bookrunner, Citigroup, Goldman Sachs International and Mediobanca as coglobal coordinators and joint bookrunners and in addition Barclays, BofA Merrill Lynch, Commerzbank, JP Morgan, Morgan Stanley and Société Générale as joint bookrunners. Banca Monte dei Paschi di Siena is also assisted by UBS as financial advisor and MPS Capital Services as co-financial advisor as well as by Linklaters as legal advisor”.
Furthermore, in the conference call, Viola said that “the Basel 3 targets have been achieved” underlining that these are important results given that “liquidity and capital are primary objectives of our plan. The bank is moving in line with the objectives described in the business plan, revenues, operating costs and assets, the cost of credit is negative but there are still many actions we are taking to improve it".
Furthermore, the securities and derivatives portfolio fell to 35,5 billion (-3 billion compared to 2012), government bonds decreased by 2 billion euro while 6 funds were sold in private equity positions and another 10 funds are in the process of decommissioning. In terms of capital solidity, Core Tier 1 stood at 10% at the end of the year against 8,9% a year ago.
