La Popular of Sondrio approved the new Next Step 2022-2025 business plan, the first from the transformation of the institution from a cooperative into a joint-stock company, which envisages a significant and sustainable generation of value with growing shareholder remuneration: profitability up to 9,2%; net profit of 323 million euros in 2025; overall distribution of over 550 million in dividends with a stable 50% payout ratio over the plan horizon. And the market appreciates the new plan: the stock up 2,53% to 3,41 euros for a capitalization of 1,55 billion, while the Ftse Mib lost more than 1%.
The Valtellina institute aims to give a new boost to the managed savings bancassurance as well as solid capitalization, less sensitivity to inflationary pressures and targeted investments in digital. Here are the new guidelines unveiled by the Bank's new business plan.
Popolare di Sondrio, business plan 2022-2025: all the numbers
The project aims to achieve a Net income of 323 million euros in 2025, an increase of 20% compared to 2021 (269 million, 263 million expected for 2023). The interest margin instead it should grow from 529 million in 2021 to 610 million in 2023 to 667 million in 2025.
The former popular explains, that the profitability (Roe) is expected to increase to 9,2% in 2025 (from 8,9% in 2021 and 8,1% in 2023), as well as shareholder remuneration with over 550 million euros dividends foreseen in the span of the plan and a payout ratio which is expected to rise from 34% in 2021 to 50% from 2023 onwards.
The bank is betting on the growth of assets under management which should rise from 6,796 billion in 2021 to 8,457 billion in 2023 up to 10,875 billion in 2025, an increase of about 40%, while the insurance collection it should go from 1,909 billion in 2021 to 2,271 billion in 2023 to 2,883 billion in 2025. Loans to customers are expected to grow in turn from 31,059 billion to 35,879 billion in 2025.
Cet 1 ratio above 15%, cost/income ratio at 51,8%
Il relationship between costs and revenues should fall from 54,1% in 2021 to 51,8% in 2025, the cost of credit risk will go from 0,43 in 2021 to 0,52 in 2023 to settle at 0,47 in 2025. As for the non-performing loans, gross Npe is expected to drop significantly from 5,8% in 2021 to 4,3% in 2023 to 3,8% in 2025, with coverage starting from 55,4% in 2021 to 45,8% expected in 2025. The Cet 1 ratio phased in is always expected to be above 15% (a very high level), from 15,8% in 2021 to 15,6% in 2025.
Investments in technology and focus on ESG factors in the Popolare di Sondrio plan
The business plan focuses heavily on digital. In particular, investments in personnel and digitization are envisaged, with the cost base under control. IT spending is expected to grow to 120 million in 2025 (from 86 million in 2021); operating costs of €619 million in 2025 (from €558 million in 2021) with a cost/income ratio expected to fall to 51,8% in 2025 (from 54,1% in 2021).
Particular emphasis is given to the integration of Esg factors in business. The institute led by Mario Pedranzini foresees a strengthening of the commitment towards sustainability e inclusion, through a series of initiatives: definition of ESG performance targets; integration of sustainability into the Bank's main processes, through an adjustment of policies and internal regulations, particularly in the areas of credit, investments and risk management; development of new sustainable products and services; responsible investment guidelines; issue of new ESG bonds; adherence to the most relevant ESG initiatives for the banking sector; actions to further strengthen governance; continuous monitoring of emission and energy performance; definition of a broader ESG communication strategy.
Pedranzini (ad Pop Sondrio): “We are a bank that does banking”
“It is a source of pride for me to be able to present our first business plan after having transformed into a joint-stock company at the end of 2021”, explains CEO Pedranzini. “With the foundation that took place in Sondrio in 1871, we were one of the first cooperative banks in the country. Our vocation is to grow together with our customers while preserving our identity but continuing to innovate".
“Over the past ten years, characterized by the well-known context difficulties, our operating margin has amply covered and exceeded credit losses, unlike the sector average”, continued Pedranzini, adding that “our capitalization is at the top of the system. We are the Italian bank that has grown the most organically, investing in people and the network. The Next Step 2022-2025 business plan tells the prospects of a 'bank that does banking' focused on its own distinctive areas, intending to grow in areas, such as asset management and bancassurance, in which we believe we still have ample potential, evolving the relationship with our customers in a digital sense”.
