On paper in Italy there is room for further consolidation of the banking sector, but in practice much less. This is the thought of the CEO of Mediobanca, Alberto Nagel, after the hostile takeover bid launched in Spain by BBVA on Banco de Sabadell. A risk that could also arise in Italy. «Yes, there is room for consolidation between banks, because there is still a high number of banks and because, especially in the commercial banking business, scale is important», explained Nagel in the call on the results of the first nine months of the Mediobanca’s 2023-2024 financial year. On paper “this is a possibility”.
M&A between banks in Italy? The high ratings work against it
However, when we look at the situations in concrete terms, compared to the times of the last major operation in Italy (the acquisition of Ubi by Intesa Sanpaolo), «there are some positive elements and others that are negative: positively, banks are in better shape now. But if there was badwill before, today it is no longer the case. Valuations are higher and therefore the synergies that need to be put in place to make operations attractive are more difficult. Therefore”, clarified the banker, “some elements suggest that the concentrations are correct, but from a mathematical point of view they are less so”.
Generali remains an investment that produces very interesting returns
As for Generali, in which Mediobanca holds a 13.11% stake, the climate among the shareholders is now calmer than two years ago when the renewal of the Leone top management had split the large shareholders in two: on the one hand Caltagirone, Del Vecchio and the Benettons and on the other Piazzetta Cuccia. «The Genereli board of directors works well, it seems to me that all the shareholders and directors contribute in the best way so that the company can continue to achieve the results it does». In fact, he added, Generali continues to produce better results than plan. It is an “investment that produces very interesting returns”. Same considerations for Mediobanca: «all the directors and shareholder representatives contribute in the best way to make the bank progress», said Nagel. Today on the Piazzetta Cuccia board of directors there are directors appointed by the major shareholders, Delfin of the Del Vecchio family and Caltagirone.
The interest margin has not reached its peak, it will grow further in 2024 and 2025
For the entire 2023/2024 financial year, which will end at the end of June, Nagel reiterated that he expects revenues of around 3.5 billion, with sustained growth in both interest margin (+10% year on year) and commissions and this will lead to double-digit growth in earnings and dividends per share year over year. «We see this trend continuing next year too and we estimate an increase in the interest margin and commissions also in 2025 and 2026. I believe we will have a good industrial trend in the coming quarters», predicted the CEO, specifying that the interest has not yet reached its peak: «it will also grow in 2024 and 2025 at a low single digit speed».
The balance of the dividend will be similar to the interim dividend (0.51 euros per share)
The leaders of Piazzetta Cuccia are planning a future of the bank more focused on wealth management. They have also demonstrated that capital-light activities are possible in the Corporate & Investment Banking division, «that will be the direction we aim to take in the coming quarters. We continue to have improving results in Insurance and Consumer Finance. These elements”, continued Nagel, “lead us to have a truly interesting distribution of capital which in our case translates into cash dividends and buybacks”. Mediobanca will distribute for the first time to shareholders by June an interim dividend of 0.51 euros per share (0.4 billion to be paid on 22 May; yield of 4%). The total shareholder remuneration, including the buyback of 0.2 billion (17 million shares purchased and to be canceled by June), is equal to 0.6 billion euros and offers a yield of 5%. «We are making our first advance payment on the dividend. There may be marginal differences, but it is difficult to think of a second half that is very different from the first, with a similar trend in net profit,” Nagel said regarding the size of the dividend balance. The advance payment is equal to 70% of the net profit of the first half of the year and the balance «will be 70% of the second half of the year».
Mediobanca Premier: reality is better than expectations
At the same time, earnings per share have a very positive trend which should also be confirmed in the fourth quarter. «We expected to see an increase of 10-15% for the most important metrics, such as profit and dividend per share, but we are more between 15-20% and this trend, barring unforeseeable events, should also be confirmed for the end of the year », assured the top manager, finally focusing on the rebranding of CheBanca! in Mediobanca Premier: «reality is better than expectations. It’s not just a question of numbers: the quality of the people who will be added to our staff” will continue to improve “in the coming months”.
Growth of the Wealth Management division above the market
Mediobanca certainly has an even more robust and diversified growth than in the past, which requires less capital and boasts an improved risk profile. For Nagel, the change of skin of Mediobanca Premier was more attractive than expected, supporting the performance of the Wealth Management division whose “growth is higher than the market”. In the third quarter of 2024, net flows of assets under management were equal to 10% of existing stocks, compared to approximately 2% of the peer average. Assets under management and under administration rose by 22% on an annual basis to 70.1 billion, with net inflows of approximately 7 billion (2.6 billion in the last quarter, of which approximately one billion was managed). While Total financial assets (TFA) increased to 96.5 billion (+11.8 billion on an annual basis, +2.9 billion in the last quarter), in line with the progression of the plan, benefiting at the end of the year also the growth of the markets (+1.6 billion).
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Posting time: 10/05/2024 12:34
Last update: 10/05/2024 13:20
