PROFIT IS BACK TO THE POPULAR BANK
NO TO DILUTIVE AGGREGATIONS FOR SHAREHOLDERS
In the first quarter of 2015, Banco Popolare revised its profit recording profits of 209 million euros compared to a loss of 19 million in the same period of 2014 and after the maxi redundancy of the fourth quarter of 2014 of 1,8 billion linked to the ECB adjustments. Operating income rose by 6,9% to 954 million. Both figures beat analysts' expectations, which forecast a profit of 151 million and proceeds of 873 million. The common equity tier 1 coefficient calculated with full application of the new Basel 3 rules is 11,6%.
In the conference call with analysts, the CEO Pier Francesco Saviotti said that 250 million non-performing loans could be sold shortly. "Negotiations are underway which could be concluded shortly for unsecured non-performing loans of around 200 million", he said, adding that the Bank then has another negotiation for 50 million, "which should be closed shortly, for products of the leasing division".
For Saviotti, resorting to the bad bank shouldn't mean selling off. "There are rumors about the values at which impaired loans could be sold to a possible newco", the so-called system bad bank, Saviotti said, "and the values advertised by the press are not values that invite enthusiasm, therefore each of we should make his assessments”. To these values, the CEO declared that he has no intention of giving up anything because “they are excessively penalizing values”. “We await the events – she continued – We are anyway interested in selling and not in selling off”. This position is affected by the fact that 87% of Banco's non-performing loans are covered by collateral which still today in some cases have excessively penalizing valuations and which, said Saviotti, "under normal market conditions will have very different valuations".
As for the European-wide debate on deferred taxes, which could be considered state aid, Saviotti judged a possible European intervention "scandalous", an issue on which politicians "should make a big mess".
Finally, with regard to mergers triggered by the reform of cooperative banks, Banco's CEO said he was against mergers that dilute shareholders too much. “The need to find company must be compensated for by the need not to penalise, if not marginally, our shareholders – she said – I am absolutely not interested in doing trades that are excessively diluted”.
RESULTS BETTER THAN EXPECTED FOR UBI
BPER, BEST QUARTER SINCE THE END OF 2012
The first quarter of Ubi Banca closed with a net profit up 30,6% to 75,9 million, above the expectations of analysts which remained at 68 million. Operating income, also higher than estimates, stood at 866 million (+1,5%), with net interest income at 430,6 million (-5,3%) and fees and commissions at 341,2 million (+ 13,7%). Loan loss provisions fell to 190,2 million from 198,6. Lastly, on the capital solidity front, the common equity tier 1 phased in settled at 12,45%, while the figure is estimated at 12,2%. For 2015, UBI estimates that "a recovery in customer intermediated volumes, despite the presence of fierce competition on the price front, should contribute to supporting the interest margin component deriving from customers". Lastly, the cost of credit is expected to be “lower than in 2014”.
Strong growth in profit also for Bper: + 65,6% to 51,7 million euros. This is the best quarter since the end of 2012. In fact, if revenues showed a drop of 4,5 due to the drop in the interest margin, net adjustments to loans and other assets decreased sharply to 150 million, -44 % on the previous quarter, -30,2% on the first quarter of 2014, marking the best figure of the last 10 quarters. The level of coverage of non-performing loans stands at 41% from 40,7% at the end of 2014. The fully phased pro-forma Cet1 ratio is at 11,3% (11,4% phased in).
BPM, PROFIT ABOVE ESTIMATIONS
BUT OPERATING REVENUES FALL
Profit up 5,1% for the Popolare di Milano which does better than analysts' estimates. The normalized profit (net of non-recurring items) also did well, marking the best level for 4 years.
But the quarter recorded operating income down 3,7% to 425,8 million, below analysts' estimates of 413 million due to the decline in net interest income. However, it should be noted that Bpm experienced a 1,6% increase in loans to customers to 32,6 billion, thus reversing a negative trend that had lasted for three years. Total net adjustments for impairment of loans and other transactions amounted to 74,3 million, down by 11 million compared to March 2014.
As far as capital solidity is concerned, Common equity tier 1 stands at 11,57% (11,58% at the end of 2014). A result that also bodes well in terms of dividends. Bpm, said managing director Giuseppe Castagna during the conference call with analysts, has capital solidity that "allows us to look at both internal and external growth and also at a distribution of dividends which I believe makes our bank particularly interesting".
