- Revenue: Up 9% to EUR3.6 billion.
- Total Financial Assets (TFA): Up 13% to EUR100 billion.
- Risk-Weighted Assets (RWA): Reduced by 7% to EUR48 billion.
- Net Interest Income (NII) and Fees: Both grew by double digits.
- Gross Operating Profit (GOP): Up 12%.
- Net Profit: Increased by 24%.
- Earnings Per Share (EPS): Up 27% to EUR1.43 per share.
- Return on Tangible Equity (ROTE): Flat at 14%.
- Return on Risk-Weighted Assets (RoRWA): Up 30 basis points to 2.7%.
- Common Equity Tier 1 (CET1) Ratio: Increased by 90 basis points QoQ to 16.1%.
- Total Distribution: EUR1.1 billion, including EUR900 million in cash dividends and EUR200 million in buybacks.
- New Share Buyback: EUR385 million.
- Net New Money in Wealth Management: EUR4.5 billion.
- Net Profit in Consumer Finance: EUR380 million.
- Net Profit in Last Quarter: EUR330 million.
- Assets Under Management (AUM): Reached EUR100 billion.
- Corporate and Investment Banking (CIB) Revenue: Up 49% QoQ.
- New Loans in CIB: EUR2.2 billion.
- Revenue from Buy Now Pay Later (BNPL): Higher than EUR300 million.
- Net New Loans in Consumer Finance: EUR8.4 billion.
- Buy Now Pay Later (BNPL) New Loan Production: EUR140-150 million per quarter.
- Cost of Risk (CoR): Reduced to 48 basis points.
- Net New Money Target: EUR9-10 billion.
- EPS Growth Target: 6-8%.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 9% to EUR3.6 billion, with all divisions contributing positively.
- Net profit increased by 24%, with EPS up 27% to EUR1.43 per share.
- CET1 ratio improved by 90 basis points QoQ to 16.1%, indicating strong capital adequacy.
- Significant growth in Wealth Management, with EUR4.5 billion of net new money collected.
- Successful launch of Mediobanca Premier, showing stronger-than-expected performance.
Negative Points
- Higher costs due to investments in digitalization, cybersecurity, and recruitment.
- Conservative EPS growth forecast of 6% to 8% for next year, lower than past performance.
- RWA reduction by 7% to EUR48 billion, which may limit future growth opportunities.
- Increased cost of deposits due to promotional campaigns, impacting NII growth.
- Potential risks from regulatory changes and the possibility of a bank tax impacting profitability.
Q & A Highlights
Q: Hi, good morning. I heard you in the conference call you are very upbeat on the growth and the success of your strategy. You have managed to give us a very impressive buyback results. But then when I look at the outlook, I'm a little bit puzzled and if you can help me to reconcile it, you gave an EPS growth for next year between 6% to 8%.
A: Thank you, Azzurra, in terms of EPS, basically as we are investing a lot, we think that is the data. This is the right way to let the company develop in terms of hiring people, invest in digitalization, invest in cybersecurity. So part of the growth in revenue is going to be absorbed by cost. Then in terms of -- I don't think we have been prudent because in terms of basically the revenue, we had forecasted an increase in loan. We have forecasted an increase of EUR3 billion of loan coming from basically mixed of the three business recovering loan.
Q: Hi, good morning. It's Antonio from Bank of America. I have two questions and one follow up, please. The first one is related to your guidance on fees, particularly around wealth management. You've had a strong year this year and yet in wealth, I think you've had EUR8 billion of inflows despite sort of the Credit Suisse event. Now you're guiding for EUR9 billion, EUR10 billion next year, which is a big number. So are you seeing the development of fee margins next year because the mix of products, of course, is very important. We've seen growth mainly in the lower fee margin products like BTPs, for example. Can you talk about this trade-off if it exists and among which asset class, do you see the most opportunities to grow and what margin would you expect? That's my first question.
A: Thank you, Antonio. First of all, I have to say that in the last few weeks and months, we have seen a recovery of the, I would say, managed assets intake. So even July has been quite a good month for managed assets. So the name of the game this year is back to managed assets. Of course, we will still have competition from BTP, but we see clients more and more keen also to take on managed assets. Hence, basically for this reason we set them a EUR10 billion between EUR9 billion and EUR10 billion of net new money, which is split between, I would say four in Private, four in Premier, and two in factories.
Q: Good morning. It's Giovanni. A couple of questions on my side. The first one is a clarification. I think that the impact from the introduction of Basel IV for Mediobanca is going to be neutral. Can you share with us the details of these and possibly what would be the main driver, even if I said I understand that the impact would be quite limited? And I was wondering whether you can share with us if you think that at the broader sector level in Italy, the impact of Basel IV may have some impact in terms of capital generation for the bank's distribution or M&A activity?
A: In terms of Basel IV, we don't have to quote it at 125 basis points, with the share buyback will be in the region, including the share buyback. It will be in the region of EUR14.5 billion, above EUR14.5 billion. And this is comprehensive taking already into consideration all the Basel IV impact. So basically, we have slashed -- neutral slashed very modest impact. I'm not in a position to tell -- I thought, I mean, you indicated the Italian banks, I don't know if they are the most exposed. I would think that maybe there are non-Italian players, are most exposed in terms of budget for like maybe the French or others.
Q: Good morning. Thank you very much for taking my question. The first one is on the deposit growth that you state your target. You're saying that you want to grow the deposits so that you can convert part of them into assets that are met. I was wondering if you could tell us how much can you comfortably convert without worrying about liquidity? The second one is what is the cost of risk for the consumer finance business? You said that it's been trending upward slightly because of the changes in mix. So where do you see this customer stabilizing once we see the full effect of the mixture? And if I may, just add a quick follow-up. As you flagged, you've done a great job increasing total financial assets, but I wanted to confirm, again, your view on the management margin specifically, how are you thinking about it moving forward or should we continue to expect growth compulsory for volume? Thank you.
A: Thank you, Pamela. Good morning. We think that a target of converting 70% of the promotion of the campaign into managed assets is the target we should have. Let's see if we do the 70%, we do much, more or less. CoR, CoR, as we always said, that in-store to pre-COVID level makes sense. It made sense because of the nature and it makes even more sense today with a different mix. Why? So sort of pre-COVID levels, so something in the region of EUR220 million, meaning industrial CoR of consumer, it was already a very good level pre-COVID. Now with this new mix, which is more geared into personal owner. I think the sort of, EUR215 million, EUR220 million, it's a target we have in mind. Now it won't be this magnitude because we will use a part overlay, but I think it's reasonable to think at this number, looking forward.
Q: Hi. It's mainly about NII. So you guided for EUR3 billion loan growth. That's quite a lot, almost 6%. But then you guide for that also margin to expand in consumer with lower rates. So I struggled to reconcile the guidance of the limited growth in NII. So in a way, where should we see NII weakness and is that related perhaps to the cost of green deposits?
A: So EUR3 billion are coming from one end recovery in CIB. Recovery should be because there's been this year a very low use of SCS. We think that this year, for tactical reason there will be more demand for that and we'll use for that. There would be some more acquisition finance that would be in the second part of the year, coupled with lower interest rates and more demand for mortgage. In Compass we'll continue to print into the growth we have been seeing. So altogether, this makes the distributor.
Q: Hi, good morning. Thanks for taking my question. First of all, thank you very much for the disclosure. I say it is, but thank you for your very good disclosure on numbers. I think this helps also the story and thank you to Jessica and Louisa. I do have -- I mean two questions. One on the NII and one capital distribution was just
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
