Release Date: February 11, 2025

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

Positive Points

• Mediobanca SpA (MDIBY) reported a net profit of EUR 660 million with a return on tangible equity of 14%, indicating strong financial performance.
• The company experienced significant growth in wealth management, with approximately EUR 5 billion in net new money.
• Consumer finance saw robust growth, with over EUR 4 billion in new loans, surpassing sector growth rates.
• Revenue increased by 7% over the past six months, driven by a 30% rise in fees, particularly in CIB and wealth management.
• Mediobanca SpA (MDIBY) achieved an all-time high in quarterly revenue, reaching nearly EUR 1 billion, with significant contributions from all business sectors.

Negative Points

• The NII (Net Interest Income) trend was previously disappointing, although it has shown some improvement recently.
• There is a potential risk of revenue attrition if a proposed merger with another bank proceeds, as it may not align with Mediobanca's strategic goals.
• The company faces execution risks related to the proposed merger, including potential contingent liabilities from the offeror's balance sheet.
• Mediobanca SpA (MDIBY) has a high cost ratio of 42%, which could impact profitability if not managed effectively.
• There is a concern about the sustainability of the current high levels of advisory fees, which may be subject to variability.

Q & A Highlights

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

Q: Can you provide more details on the upgraded guidance for 2026, particularly regarding revenue and profit increases? How do you plan to sustain revenue growth in uncertain times? A: The guidance upgrade is driven by a better trend in NAI, supported by consumer finance and corporate lending. We expect continued strong NAI trends in Compass and more acquisition finance in corporate. For fees, we anticipate an acceleration in wealth management fees. The distribution strategy includes a 70% cash payout and a share buyback, with plans for 100% cash distribution next year. (Unidentified_1)

Q: Could there be a deceleration in net new money trends due to normalization, and how do you expect margins to evolve? A: We expect the current trend in net new money to continue, supported by efforts to increase existing bankers' portfolios. Margins are assumed to be flat, with potential impacts from BTP issuance counterbalanced by other product placements. (Unidentified_1)

Q: Can you elaborate on the sustainability of the strong Q2 performance in CIB and wealth management? A: The trend in fees is expected to align with low double-digit growth guidance, with some variability. The CIB and wealth management sectors are expected to maintain their performance, supported by a strong pipeline and seasonal elements. (Unidentified_1)

Q: Is the strong contribution from ARMA in CIB revenues seasonal, and what are the implications of governance changes on the Danish compromise? A: The contribution from ARMA is not purely seasonal; it reflects a stronger mandate intake and market leadership. Regarding governance, maintaining a board member is crucial for risk weighting and supervisory expectations. (Unidentified_1)

Q: With strong advisory generation and Compass origination, is there potential for further capital returns to shareholders? A: Advisory fees are largely driven by ARMA, and Compass's growth is stable, driven by its distribution network. We are already planning additional capital distribution, with potential for further elaboration towards the fiscal year's end. (Unidentified_1)

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