Banco BPM Spa announced a record net profit of 943 million euros in the first three quarters of 2023, an impressive year-on-year increase of 93.6%. The bank’s financial strategy expects net profit for the current year to exceed 1.2 billion euros, or more than 0.8 euros per share, and is expected to grow to around 0.9 euros per share in 2024.
In the balance sheet approved by the bank’s board of directors, net interest income surged 52% to 2.42 billion euros in the first nine months of this year. This increase was primarily due to the widening trade deficit due to rising interest rates and the limited impact on financing costs, despite the absence of TLTRO loan remuneration benefits this year.
Net fees and commissions decreased slightly by 2.2% compared with the same period last year. On the other hand, the cost-to-income ratio increased significantly from 54.7% to 48.4%, indicating that the cost management strategy is effective.
The bank’s capital ratios also improved significantly: common equity Tier 1 capital ratio was 14.3%, Tier 1 capital ratio was 16.7%, and total capital ratio was 19%, at 7%. These figures demonstrate the bank’s solid capital base and reinforce the bank’s market position.
In response to Economy Minister Giancarlo Giorgetti’s “asset” decree, Banco BPM has chosen not to comply with the new surplus profits tax. Instead, it set aside 378 million euros (about 2.5 times its tax liability) into non-distributable reserves. The decision is aimed at providing savers with a financial cushion.
Despite these positive results and strategic moves, Banco BPM shares closed down 0.8% on Tuesday at €4.86. The share price decline suggests the market is still reacting to the bank’s financial results and strategic decisions.
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InvestingPro’s real-time data highlights Banco BPM’s financial performance. The bank has a market capitalization of $7,844.18 million and a price-to-earnings ratio of 7.52 times, indicating that its stock may be undervalued. The bank’s revenue growth in the trailing 12 months to Q2 2023 was 15.94%, demonstrating strong financial health.
InvestingPro Tips highlights that Banco BPM has increased its dividend for three consecutive years, which may appeal to income-focused investors. The bank’s valuation implies a lower free cash flow yield, which could be a concern for potential investors. However, analysts predict the company will turn a profit this year, which could fuel future growth.
InvestingPro provides additional tips and data points for Banco BPM, providing a comprehensive view of a company’s financial performance. These insights can help investors make informed decisions about whether to invest in Banco BPM.
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