Bper, the Italian bank led by CEO Piero Luigi Montaniwill announce its accounts for the fourth quarter of 2023 next week, Wednesday 7 February.
The conference call with analysts, following the publication of the quarterly report, it will open at 6pm Italian time.
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Not just Bper: Italian banks’ profits are heading towards a crucial week
The publication of Bper’s accounts that of the quarterly reports of other Italian banks will follow, come Intesa Sanpaolo (Tuesday 6 February).
Mps it will instead publish the quarterly report on the same day, Wednesday 7 February.
The first Italian bank to inaugurate the earnings season of the banking sector will be UniCredit, Monday 5 February.
On Thursday 8 February it will be the turn of BPM Bank.
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Bloomberg and Equita consensus estimates on net profit, NII, revenues
Bloomberg forecasts for Bper GAAP net profit at 100.10 millioncompared to 382.52 million in the previous quarter.
Equita SIM estimates a profit to 116 million euros.
Revenues are expected by Bloomberg to 1.369 billion euros, compared to the 1.374 billion in revenues collected by Bper in the previous quarter.
Practically similar Equita’s revenue outlook, which is in the amount of 1.392 billion, up 1% quarterly but down 4% year-on-year.
With regard to the net interest margin (NII), the budget item that has so far benefited most from the effect of rate increases by Christine Lagarde’s ECB, Equita’s expectations are for an NII equal to 852 million euros, up 2% on a quarterly basis, and growing by as much as 51% on an annual basis
The provisions are expected from Bloomberg rising to 100.24 million, compared to 95.35 million in the third quarter of last year.
Equita SIM is instead for a slightly lower LLP value, equal to 98 million euros.
Uzair Kundi, analyst in Bloomberg Intelligence’s banking division underlines that, “the analysts probably exaggerated a little in predicting a net interest margin of 840 million euros for Bper, for the fourth quarter of 2023, at least according to Bloomberg’s analysis”.
According to Kundi, Bper’s net interest margin could indeed start to decline in the fourth quarter.
The determining factor, according to the analyst, will be the guidance for 2024, which could perhaps anticipate a decline in the NII, net interest margin, lower than the -6% expected by consensus and an increase in net profit perhaps stronger than that expected +1%.
In any case, Bloomberg Intelligence reports that “it is probable that fourth quarter operating costs exceed consensus”, which is “909 million euros”.
Provisions could instead be less than those 100 million euros expected by analysts.
Bper: watch out for costs and dividends
According to Kundi, Bper could announce a share buyback plan of up to 500 million eurosthanks to the “strong CET1 buffer and 0.5x book value”.
Bloomberg identifies another key factor in the bank’s ability to improve its operational efficiency, in order to improve profitability.
In this regard, the estimates are one ratio cost-to-income, nel 2024, below the target of less than 55%.
Returning to Equita’s note, SIM wrote in the note dedicated to the preview of the profits of Italian banks to estimate “another excellent set of results on the revenue generation front, with a net interest margin (NII) still growing both on a quarterly and annual basis, and commissions which, thanks to the favorable quarterly seasonality, are expected to rise markedly”, to be precise 8% on a quarterly basis and stable every year.
“On the front of operating coststhe fourth quarter – we read again in the Equita note – will be impacted by one-off elements linked to) the new staff exit plan (around 1000 people) and ii) anticipation of costs linked to the renewal of the banking contractinitially estimated by the company at around €400 million but which we believe could settle at a lower level in the €350-370 million area”.
“Net of the one-off elements – SIM estimates – the C/I should be in the 55% area, while, “under the operating line, we do not expect particular elements of discontinuity compared to the third quarter of 2023, with a CoR (cost of risk) at c.45bps”.
“Overall – SIM underlines -, we estimate that Bper will report full-year 2023 profit of €1.203 billion. Equita has thus improved its outlook by 4% compared to the previous estimate, as it expects “a greater net interest margin” as well as, also“lower one-off costs) or €1,455 million net of extraordinary components”.
Regarding dividends, Equita believes that Bper could propose a dividend per share of €0.36 (yield 11%), which implies a payout > 40%.
“We do a fine tuning to the 2024-25 estimates without substantial changes – concluded the Milanese SIM – we therefore confirm the target price at €4.6 (target 2025E P/E = 6x, P/TE = 0.73x)”.
Equita pointed out that the Bper stock deals with a 2025E P/E = 4.3x P/TE in area 0.5x.