Banco BPM and Bper on the Stock Exchange waiting for I quarter profits. The preview
Yet another bad day for the securities of Italian banks, with Banco BPM and Bper which are confirmed as the worst shares of the Ftse Mib list of Piazza Affari.
Bper slips by 6%, while Banco BPM falls by more than 4%.
In general, the banking sector is under pressure, in the wake of the disappointing news from the United States and Europe.
On the Ftse Mib the sells also shoot up Mps -3,4%, UniCredit, a loss of more than 2% e Intesa Sanpaolo-1,5% circa.
Mediobanca flat, just above parity.
UniCredit, the bank led by CEO Andrea Orcel, stands out with the latest news, indiscretions and significant equity investments which, in this latest case, see the protagonist Goldman Sachs.
The UniCredit stock turns out to be among other things among the most shorted bank stocks.
However, the worst stocks on the list today are Banco BPM and Bper.
In particular, the speculative appeal that saw the Banco BPM stock as protagonist, until last week – in the wake of the return of the hypothesis of a merger with UniCredit –it has totally deflated, at least for now.
After all, it was the same CEO Giuseppe Castagna to issue statements on UniCredit but also on Mps-Monte dei Paschi di Siena, which have cooled the speculations.
At this point the focus is on the next quarterly, which will be released after the accounts of the two Bigs UniCredit and Intesa SanPaolorespectively the next 3 and 5 May.
UniCredit and Intesa SanPaolo: useful previews of Equita SIM
Banco BPM Day on 8 May. Strong increase in NII expected
Banco BPM Day is on the calendar next May 8th. Equita presents the quarterly preview.
“We expect a solid quarter, with no material changes in either the deposit base or loan side and no tangible signs of deterioration in asset quality. On the revenue frontwe expect a significant benefit to the NII (interest margin) from trade spread widening in light of a beta on deposits still contained“.
“In fact – Equita analyst Andrea Lisi writes in the note – we estimate a NII showing a significant increase on an annual basis and slightly growing also on a quarterly basis, despite the negative calendar effect and the absence of the contribution from TLTRO“.
The view on revenues was positive, which “should also be supported by some increase in
commissions after the low reached in the fourth quarter of 2022”.
Furthermore, “with operating costs expected to remain under control, we estimate a 53% C/I, in line with what was reported in the previous quarter. Below the operating line the heart (cost of risk) should have remained at low levels around 55 basis points.
Preview Equita on Banco BPM: interest margin + 44%
Equita SIM summarizes Banco BPM’s quarterly forecasts as follows:
- NII (interest margin): 736 million (+2% on a quarterly basis, +44% on an annual basis).
- Total revenue: 1,230 billion (-2% on a quarterly basis, +4% on an annual basis).
- Operational profit: 584 million (-4% QoQ, +4% YoY).
- LLP: -151 million (55 basis points).
- Net income: €210 million.
“In the light of a good first quarter and of a beta of deposits that we expect to remain quite low, we have revised the estimates for 2023-24 respectively by 6%-4%, above all to take into account a higher NII (interest margin) – writes Andrea Lisi of Equita SIM – For 2023 we now estimate an EPS at €0.68 (from €0.64), above the target of > €0.6″.
It is remembered that “the guidance had been defined in a very conservative way based on an average EUR 3M of 2.5% with a deposit beta > 45% and a CoR > 50bps”.
Lisi continues, communicating Equita’s view on Banco BPM’s capital:
“On the capital front, we expect that – thanks to the organic generation of capital and the positive contribution from the adoption of IFRS 17 on the insurance business – it CET1 may hover above 13% before applying the Danish Compromise (expected impact +50bps)”.
Following the upward revision of the estimates, the SIM also rises the target price on the Banco BPM share of 3% to 5.4 euro for action, and confirm il rating buy.
For Equita, the Banco BPM stock, in fact, “deals at attractive valuations, with a 2024E P/TE < 0.5x a fronte di un ROTE > 9% e dividend yield > 9%”.
“In addition – concludes Andrea Lisi – let’s see a growing speculative appeal on hypotheses of consolidation of the sector“. Speculative appeal which therefore, even if it has deflated in recent sessions, should continue to support the prices of the credit institution, at least according to Equita.
Bper: strong quarter in terms of revenues, assist spread at NII
The day following the publication of Banco BPM’s quarterly it will be up to Bper.
The accounts are indeed expected for next May 9th.
Equita SIM writes that, “with the integration of Carige almost entirely completed in the fourth quarter of 2022, we do not expect the first quarter of 2023 to be affected by significant one-off components”.
The view, for Bper, is “a strong quarter in terms of revenues, above all thanks to a NII which should have benefited significantly from the widening of the commercial spread and with a deposit beta still at low levels. This should more than offset a fee contribution that we don’t see as particularly bright given a strong fourth quarter 2022.”
“Below the operating line – continues Andrea Lisi – in the absence of tangible signs of deterioration in the quality of assets, we estimate a CoR of approximately 55 basis points“.
In detail, Equita SIM summarizes as follows the preview on the main budget items of Bper, for the first quarter of 2023.
- Interest margin: 659 million (+17% on a quarterly basis).
- Total revenue: 1.197 billion (+8% on an adjusted quarterly basis).
- Operational profit: 526 million (+53% on an adjusted quarterly basis).
- LLP: -125 million (55bps).
- Net income: 228 million.
Andrea Lisi also communicates that Equita SIM has revised upwards the outlook on Bper’s net profit for 2023 by +11% mainly to make the NII more consistent with our 1Q23 estimates. Similarly, 2024-25E Net Income +7%/+2%“.
“We expect Bper to update the guidance provided with last year’s results, which was based on conservative assumptions on the interest rate front, i.e. Eur 3M in the 2.5% area with a deposit beta of 30%“, reads again in the preview dedicated to the Italian bank.
Equita also improved, following the upward revision of the estimates the target price on the stock, with an upgrade of “+5% to 3.5 (2024E P/TE = 0.6x with ROTE c.10%)”, noting that “the share trades with a 2024E P/TE < 0.5x e un dividend yield > 10%”.
In general, so Massimo Trabattoni, Head of Italian Equity in Kairoscomments on the conditions faced by Italian banks:
“In the short term momentum in the banking sector will find support in expected quarterly results that are still positive: in fact, as anticipated by some large American banks that have already reported their quarterly reports, it is reasonable for Italian banks to still expect stellar earnings for the first quarter of the year on the back of a very solid interest margin and low default rates”.
“However – warns Trabattoni – in the medium and long term this wave of banking crises is destined to produce a credit crunch with an inevitable increase in the risk of a recession: if on the one hand the main Central Banks have already reassured their readiness to intervene in case of need to avert any systemic risks and to support the economy, on the other hand, as managers for the moment we prefer to position ourselves on large banks that finance large companies (ie companies ‘too big to fail’, ie of such a size that it is reasonable to expect that, if they entered a condition of financial stress, the national government would not hesitate to intervene with a state bailout)”.