Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mediobanca SpA (MDIBF) reported a strong commercial flow with 2.6 billion of net new money, doubling the industry average.
• The company saw a 12% increase in net new loans in consumer finance and a 36% year-on-year increase in CIB deals.
• Fee growth was significant, up 30% year-on-year, driven by wealth management and CIB.
• The company maintained a strong asset quality with 51 basis points, well within their guidance.
• Mediobanca SpA (MDIBF) initiated a share buyback program for 385 million, authorized by their AGM and SSM.

Negative Points

• Net profitability slightly decreased to 330 million due to normalized insurance contributions.
• There was a temporary drag in NII in wealth management and CIB due to low credit spreads.
• The company faced higher deposit costs than initially forecasted.
• Cost of risk in consumer finance increased, driven by a higher mix of personal loans.
• The company anticipates flat NII for 2025 and 2026, reflecting challenges in the current interest rate environment.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with MDIBF.

Q: Can you provide insights on the payback from the premier deposit gathering campaign and its impact on NI I and fees? Also, when can we expect a decision on further capital distributions beyond the planned buyback? A: The campaign is expected to convert 50% of deposits into managed assets, with the rest remaining in liquidity. The pressure on NI I is temporary, and improvements are anticipated in the second half of the year. Decisions on further capital distributions will be made towards the end of the plan, considering potential M&A activities.

Q: What are the reasons behind the lowered NI I guidance, and how does it affect the EPS growth target? A: The NI I guidance was lowered due to tactical decisions to focus on increasing TFA and waiting for better margins in corporate lending. Despite this, EPS growth is maintained at 6-8% due to cost management and potential revenue improvements in other areas.

Q: Can you explain the increase in cost of risk in consumer finance and its implications? A: The increase in cost of risk is primarily due to a shift towards more personal loans, which have higher profitability but also higher associated risks. This is part of a strategic move to enhance returns, with net profitability remaining strong.

Q: What initiatives are being taken to manage costs while supporting company growth? A: The company is focusing on maintaining cost discipline while continuing to invest in key growth areas such as recruitment and digital infrastructure. Some non-strategic activities may be trimmed to support this balance.

Q: How do you view the asset management consolidation trend in Italy and its impact on your strategy? A: The trend towards consolidation in asset management, especially in liquid solutions, highlights the need for scale. Mediobanca focuses on wealth management and distribution rather than production, and will continue to explore opportunities for organic growth and strategic acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.