Banco BPM (BAMI) H2 2023 earnings summary

Executive summary

• FY 2023 net income reached €1,264.4m, up 84.6% YoY; RoTE was 12.4% versus 7.0% in 2022.

• Core revenues rose 22% to €5,339m and pre-provision income increased 29% to €2,770m, both above guidance.

• Strategic-plan targets were reaffirmed, including €6bn cumulative profit and €4bn shareholder remuneration for 2023–2026.

Financial highlights

• Total income was €5,341m, up 14.3% YoY; net interest income rose 42.1% to €3,289.2m, while net fees and commissions declined 1.4% to €1,860m.

• Operating costs increased 1.6% to €2,571.2m; loan loss provisions fell 18.1% to €559m from €682m.

• Reported net income was €1,264.4m; adjusted net income was €1,432.4m, excluding non-recurring items that reduced reported net income by €168m.

• Total customer funding reached €210.3bn, while indirect customer funding rose 16.2% YoY to €106.2bn.

Outlook and guidance

• 2024 EPS guidance was confirmed at ~€0.90 excluding non-recurring components and >€1.10 including currently assumed one-offs; interim dividend guidance was ~€0.55bn.

• 2024 pre-provision income is expected to rise, supported by net interest income and fee growth; inflation and wage pressures are expected to be partly offset by cost discipline and technology initiatives.

• Credit provisions are expected to remain broadly stable; potential higher default rates are expected to be offset by the removal of negative 2023 components booked to support NPE disposals.

• 2026 targets include €5.4bn revenue, €2.7bn operating costs, €2.75bn pre-provision income and net income above €1.5bn.

• Under an accelerated rate-cut scenario, mitigating actions reduce the potential 2026 gross revenue impact from €170m to €50m–€70m; net income and remuneration targets remain confirmed.