Banca Monte dei Paschi di Siena (BMPS) Q4 2023 earnings summary

Executive summary

• FY23 net profit was €2,051.8m versus a €178m loss in FY22; 4Q23 profit of €1,123m included €466m of legal-risk provision releases and a €339m positive tax component.

• Operating income rose 21.7% and costs fell 12.6%; gross operating profit nearly doubled to €1,954.1m.

• Fully loaded CET1 was 18.1% after the proposed dividend; total commercial savings rose 6.6% to €157.9bn.

Financial highlights

• FY23 revenue was €3,796.8m, up 21.7%; net interest income rose 49.3% to €2,292.1m, while net fees and commissions fell 3.1% to €1,321.9m.

• Operating expenses fell 12.6% to €1,842.8m; net operating income rose to €1,510.6m from €593.6m, and pre-tax profit was €1,706.5m versus a €605.1m loss.

• FY23 net profit was €2,051.8m, or €1.629 basic and diluted EPS; cost of customer credit was €440.3m versus €416.9m in FY22.

• 4Q23 net operating profit was €371m, including €40m of labour-contract renewal costs; quarterly gross operating profit was €507.6m, broadly flat QoQ.

• 4Q23 fees were €335m, up 5.9% QoQ, with traditional banking fees up 9.4% and wealth-management fees up 1.0%.

Outlook and guidance

• 2024 NII expected to remain resilient despite rate cuts, supported by an improved commercial lending mix; wealth-management initiatives expected to support fee growth.

• Costs expected to rise slightly as efficiency actions mitigate the impact of the national labour-contract renewal.

• Cost of risk expected at the 2023 level; pre-tax profit expected above 2023 excluding risk-and-charge provision releases.

• 2024 dividend payout target is 50% of pre-tax profit; organic capital generation expected to keep fully loaded CET1 above 18% after distribution.