Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues grew by 4%, reaching EUR2.8 billion, demonstrating strong business resilience.
- Profit before tax increased by almost 16%, reaching EUR1.1 billion.
- Cost income ratio remained stable at 50.6%, reflecting effective cost discipline.
- Adjusted return on tangible equity stands at a robust 16.5%, with a CET1 ratio of 15.3%.
- Liquidity profile remained strong, with LCR at 161.4% and NSFR at 134.6%.
Negative Points
- Stated profit was lower year-on-year and quarter-on-quarter due to a limited tax rate in previous periods.
- Operating cost guidance was revised modestly upwards.
- Gross NPAs increased by EUR300 million quarter-on-quarter.
- HR-related actions resulted in significant one-off costs, including EUR174 million in Q2 2024.
- Market risk-weighted assets increased by EUR1.2 billion quarter-on-quarter.
Q & A Highlights
Q: Can you update us on the impact of Basel 4, especially regarding operational risk?
A: The Basel 4 impact will be 70 basis points, with operational risk accounting for 40 basis points. For 2024, the impact is zero. Regarding upfront fees, we had EUR29.2 million in Q2, up from EUR26.5 million in Q1, mainly due to BTPs placement.
Q: Why did you upgrade NII and cost of risk guidance but leave the bottom line unchanged?
A: We are being prudent. The cost guidance change is technical, due to a reclassification affecting costs by approximately EUR40 million. Regarding restructuring, around 1,600 employees will leave, with 900 in 2024 and 700 in 2025, resulting in savings of EUR48 million in 2025 and EUR83 million by 2026.
Q: Can you explain the EUR6.5 million from non-commercial items in NII and the sustainability of market risk RWA decline?
A: The EUR6.5 million includes EUR5 million from bonds, EUR14 million from ECB, and EUR12.5 million from derivative hedging. The market risk RWA decline is sustainable, as the EUR1.2 billion potential add-on was removed after system updates.
Q: What should we expect for the payout in 2024 given the strong capital buildup?
A: We have accrued EUR0.3 as dividends, around 60% of net profit, above the 50% payout in the current plan. New guidance will be provided in the October business plan presentation. Regarding NPE increases, there are no signs of credit risk deterioration, and disposals are planned for later this year.
Q: What are your thoughts on costs and provisions going forward, and the expected tax rate for this year?
A: We focus on cost discipline and optimization. Structural actions will be detailed in the October business plan. The cost of risk will remain stable due to our conservative provisioning. The tax rate is expected to be around 30% for the next quarters.
Q: Can we expect any one-off costs in Q4 to ease the entry into 2025?
A: No further extraordinary actions are planned for this year. The major cost-cutting action was the recent staff reduction.
Q: What are your thoughts on M&A and the size of Bper Banca going forward?
A: Our current focus is on organic growth, leveraging our strong capital and liquidity. M&A is not on the table today.
Q: What are the loan growth dynamics and expectations for the new business plan?
A: Loan growth is driven by strong commercial dynamics across retail, corporate, and private banking. The new business plan will focus on cost reduction and organic growth, with updated dividend payout guidance to be provided in October.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
