Banco BPM (BAMI) H1 2024 earnings summary

Executive summary

• Adjusted net income reached €776 million in H1 2024, up 19% year-on-year, with stated net profit at €750 million, up 20% year-on-year, surpassing strategic plan targets.

• EPS guidance for 2024 raised from €0.90 to €0.95, a 14% increase over 2023, and interim dividend guidance increased to €600 million, 9% above the original plan.

• CET1 ratio improved to 15.2%, the highest since the merger and well above plan targets.

• Effective managerial actions reduced interest rate sensitivity by €50 million in H1.

• Results for 2024 are already close to the 2026 net profit target (>€1.5 billion), setting a new base for sustainable profitability.

Financial highlights

• Core revenues grew 8.3% year-on-year to €2.83 billion in H1; net interest income increased 10.9% to €1,722.8 million.

• Net fee and commission income rose 4.5% to €1,021.4 million; investment product placements up 31% year-on-year.

• Pre-provision income up 11.8% year-on-year to €1,456 million; operating profit at €1,456 million (+12% y/y).

• Cost/income ratio improved to 47.9% from 49% last year.

• Loan loss provisions reduced by 25% year-on-year to €194 million; annualized cost of risk at 38 basis points.

Outlook and guidance

• EPS guidance for 2024 raised to €0.95, with interim dividend set at €600 million and annualized dividend yield at 14%.

• Confident in achieving over €1.5 billion net profit in 2026 and exceeding €4 billion shareholder remuneration target for 2023-26.

• Profitability outlook benefits from new product factories, with full operation expected in 2026.

• Operating expenses expected to remain stable; cost of credit to improve further, with portfolio quality and NPE ratio reduction.

• Macro environment remains positive but cautious due to geopolitical risks; stable or slightly growing funding and positive net interest income trend expected for H2 2024.