Home » Banco BPM: the title race on Piazza Affari is not over, CEO Castagna believes it. Rating: the announcement

Banco BPM: the title race on Piazza Affari is not over, CEO Castagna believes it. Rating: the announcement

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Banco BPM: the title race on Piazza Affari is not over, CEO Castagna believes it.  Rating: the announcement

Watch out today at Piazza Affari to the title Banco BPM, the Italian bank led by CEO Giuseppe Castagna, highlighted today at the shareholders’ meeting.

Pay particular attention to statements released by the CEO Castagnawho recalled how the credit institution’s strong point is represented by its “nature of an autonomous and efficient public company, national and local at the same time, thanks to the proximity of our local structures to communities, businesses, institutions and the Third Sector”.

This public company DNA, added the CEO of Piazza Meda, is “our strength”; this is the element that “allows us to increase our leadership”, and to be “appreciated by the market”.

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Banco BPM: Castagna reiterates Stanalone strategy with strategic plan

Castagna returned to talk about Banco BPM’s new strategic plan 2023-2026which was presented in December 2023, and which led the markets to immediately toast the prospect of tasty dividends promised by the management.

A plan, CEO Castagna reiterated on that occasion, “built in a stand alone logic”founded “on solid pillars”, aimed at “clearly defining strategies, actions and tools that aim at sustainable income growth, accompanied by creation of value for all stakeholders and by a significant increase in remuneration policies capable of rewarding shareholders”.

And a plan, for that matter the dividend chapter, which promised “a remuneration for shareholders of 4 billion euros, five times the distribution of the last four years and for an amount exceeding 50% of the current market capitalisation”.

He also spoke about this remuneration to shareholders today the president of Banco BPM Massimo Tononiunderlining that, “after the excellent results shared in this same venue last year, we can today proudly communicate the achievement of even more significant numbers”, that is, “consolidated net profit of 1,264 million euros which allows us to propose a dividend per share of 56 cents, up 143% compared to 2023 and corresponding to a total distribution of 848 million euros”.

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Banco BPM: new Castagna plan, all about profits and dividends. The ‘buy’ comment

Castagna, for his part, underlined today that Banco BPM’s strategic plan was “built in a stand-alone logic, which will give an even greater boost to profitability growth.”

Therefore, no about-face from the CEO of Banco BPM with respect to the objective of continuing to pursue a standalone strategy, despite those who continue to believe that Piazza Meda is among those Italian banks potentially interested in taking over MPS.

However, Castagna had been clear on several occasions about his lack of interest in taking over Monte dei Paschi di Siena.

Among these, at the beginning of February this year, when he stated that in Italy the “third pole” – what the Meloni government is aiming for by marrying MPS to another credit institution – it already exists, and is made up of Banco BPM.

CEO Castagna also highlighted today that the growth trend lays the foundations “to be able to fully exploit the valorization potential of our bank: a potential which, despite the strong growth of the stock exceeding 160% in the last three years, we think it has not yet expressed itself in its entirety.”

The CEO of Piazza Meda thus underlined his confidence in the stock, underlining that Banco BPM remains undervalued.

“The experience we gained in the first years of Banco Bpm’s life demonstrates that it takes time and energy for the market to appreciate and recognize the value of such complex aggregations.”

Banco BPM: the update on the outlook from the DBRS Ratings agency. The reasons

Today Banco BPM also cashed in the positive opinion of the rating agency DBRS Ratings GmbH (Morningstar DBRS), which on the one hand confirmed the Long-Term Issuer Rating and Short-Term Issuer Rating at BBB and R-2 (high) respectively, and which on the other hand improved the outlook on the Long-Term Issuer Rating to “positive”.

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The outlook upgrade was explained by DBRS with “sustained improvements in profitability” of the institutionwhich occurred thanks to the “combination of cost control, a low cost of risk and a strong increase in turnover, in a context of higher interest rates which strengthened the net interest margin for the whole of 2023.”

The rating agency has practically confirmed the assistance that the continuous increase in interest rates in the euro area by the ECB over the last two years has given to the bank’s profitability.

Morningstar DBRS also added that it believes Banco BPM “will benefit from higher commissions thanks to the greater diversification of its business”.

Not only. “The bank has managed to consistently improve its operational efficiency through reductions in branches and staff and with the optimization of the franchising network, a factor that should continue to support profits”.

Morningstar’s outlook is essentially based on confidence in the ability of the bank led by Giuseppe Castagna to “absorb a potential deterioration in the cost of risk, which could occur in the current environment, as inflation and higher interest rates could hit customers.”

The positive trend, continued the rating agency, also takes into consideration “Banco BPM’s continuous commitment to improving the quality of assets”.

Among other things, given those “progress made in reducing the legacy of NPLs (non-performing loans) of recent years, which were already significant, the bank is planning an additional sale of NPEs (non-performing exposures) worth €700 million by 2026.”

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