• Net Income (Stated): EUR 1.9 billion.
• Net Income (Adjusted): EUR 1.7 billion.
• Return on Tangible Equity (RoTE) Adjusted: 16%.
• Dividends Distributed: EUR 1.5 billion.
• Cost/Income Ratio: Reduced by 7.5 percentage points over two years.
• Gross NPE Ratio: 2.8%.
• Net Bad Loans: Close to 0.
• EPS (Adjusted): EUR 1.12.
• Dividend Payout Ratio: Increased to almost 80% from 67%.
• Common Equity Tier 1 (CET1) Ratio: Increased to 15% from 14.2%.
• Net Interest Income (NII): Reduction of 2% in gross performing customer loans.
• New Lending: EUR 21.5 billion, 10% higher year-on-year.
• Deposit Growth: 1.4% increase.
• Total Net Fees and Commission: Increased by 6.4% normalized.
• Investment Product Placement: Improved by 22% year-on-year.
• Cost of Risk: Reduced by 17.4% to 46 basis points.
• Loan Loss Provisions: Reduced, contributing to a 22% increase in profit from continuing operations.
• Operating Costs: Reduction in HR costs by EUR 60 million secured.
• Asset Quality: Default rate slightly above 1%.
• Liquidity Coverage Ratio (LCR) and SOFR: Strong and confident figures.

• Warning! GuruFocus has detected 4 Warning Sign with BNCZF.

Release Date: February 12, 2025

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

Positive Points

• Banco BPM SpA (BNCZF) reported an all-time high net income of EUR 1.9 billion for 2024, with EUR 1.5 billion distributed as dividends.
• The company achieved a RoTE of 16%, surpassing market consensus and 2026 targets.
• Gross NPE ratio decreased to 2.8%, already below the 2026 target, indicating improved asset quality.
• Banco BPM SpA (BNCZF) plans to deliver a net income of EUR 2.150 billion by 2027, with a strong contribution from Anima.
• The company has committed to a minimum of EUR 6 billion cumulative distribution over the plan period, with potential for an additional EUR 1 billion.

Negative Points

• Net interest income (NII) showed a reduction of 2% in gross performing customer loans, despite a 10% increase in new lending.
• The company faces a potential CET1 impact of 250 basis points if the Danish Compromise is not applied to the Anima acquisition.
• There is uncertainty regarding the timing of the Danish Compromise approval, which affects the potential additional distribution.
• The company anticipates a mid-single-digit reduction in NII for 2025, reflecting challenges in the interest rate environment.
• The insurance income in Q4 was below potential, indicating room for improvement in this segment.

Q & A Highlights

Q: Can you explain the sharp quarter-on-quarter decline in insurance income for Q4 and the main drivers for future growth in this line? A: Insurance income in Q4 was satisfactory but not at full potential. The decline was due to the reversal of some loss components from previous quarters. Future growth will be driven by strong performance in Vera Vita traditional products and hybrid products sold through our Irish-based factory. The current rate environment is conducive to further improvement in insurance results.

Q: Regarding your distribution targets, will the potential additional EUR1 billion distribution be in the form of buybacks? A: The additional EUR1 billion distribution is contingent on obtaining the Danish Compromise. If approved, it will likely be distributed as a share buyback.

Q: What are the reasons for the expected decline in NII in 2026 compared to 2025? A: The decline in NII for 2026 is due to the full impact of rate reductions, with Euribor stabilizing at 200 basis points. The effect of pure sensitivity will be more pronounced in 2026, with managerial actions fully deployed by 2027.

Q: Can you provide more details on the Danish Compromise and its impact if not applied to the Anima acquisition? A: Without the Danish Compromise, the acquisition of Anima would cost around 250 basis points. We are committed to proceeding with the Anima offer and believe the Danish Compromise will eventually be applicable, as indicated by EBA guidelines.

Q: How do you foresee the evolution of fee margins and market performance in your AuM growth forecast? A: We expect stable management fee margins over the plan period, with a market performance assumption of 2.5% on average.

Q: What are the expected impacts of the regulatory headwinds, specifically Basel IV, on your capital? A: The regulatory headwinds are primarily due to Basel IV, with a phased impact of 7 basis points per year. This will continue for three years beyond the plan's end.

Q: Can you clarify the timing of the positive impacts from DTAs and OCI in your capital waterfall? A: In 2025, we expect a 44 basis point impact from DTAs, with a total of 50 basis points including OCI. A similar pace is expected in 2026, with a reduced impact in 2027 as we exhaust potential.

Q: How does the amendment of the Anima offer consideration affect UniCredit's offer for Banco BPM? A: The amendment allows UniCredit to terminate their offer, but their future actions are uncertain. They need to consider our plan's potential and the cost of a successful offer.

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