Italy's BPER boosts shareholder payout counting on strong fee growth
BPER plans dividend of 3.2 bln euros, tech investment of 650 mln
Net income growth driven by strong fee revenue despite lower interest rates
BPER targets cumulated net profit of 4.3 bln
Adds shares, analyst comment
By Andrea Mandala
MILAN, Oct 10 (Reuters) -Italy's fourth-largest bank BPER EMII.MI said onThursday it would pay shareholders an average of 75% of profits through 2027, and bet on strong fee growth to sustain its net income as interest rates decline, sending its shares up 6%.
The increase of BPER's payout ratio from slightly below 30% in 2023 will put it ahead of sector leader Intesa Sanpaolo ISP.MI, and benefit top investor Unipol US.MI, Italy's No.2 insurer which has backed its expansionover the past few years.
"We appreciate BPER's new approach, which moves away from overly conservative assumptions, revealing the true potential of the bank," Jefferies analysts said in a note.
BPER shares outperformed Italy's banking sector .FTITLMS3010 this year, thanks to its higher-than-average sensitivity to interest rates, which analysts said gave the bank an extra gear in terms of profitability.
BPER has grown rapidly through acquisitions in recent years, nearly doubling its total assets.
The bank presented a new multi-year strategy after naming veteran UniCredit banker Gianni Franco Papa as its new chief executive this year.
"This plan is realistic and straightforward," Papa said in a statement.
BPER plans to return to investors 3.2 billion euros in cash dividends in 2025-2027, against cumulated net profits whichare forecast to total 4.3 billion euros over the same period.
While the acquisitions have boosted BPER's revenues, they have also entailed high integration costs, such as those needed to fund accords with unions for voluntary early exits of staff, causing BPER to fall behind peers in shareholder remuneration.
As rising interest rates drove their profits to record levels in the past few years, Italian banks have boosted rewards for investors through dividends and share buybacks.
BPER forecast a 2027 net profit of 1.5 billion euros, compared with the 1.3 billion it expects in 2024.
Net fees will be the main profit driver, with a projected annual growth of 3.8% on average in 2024-2027, while net interest income is seen falling 1.8% a year over the period, despite plans to grow net customer loans by about 3% a year.
Despite the generous payouts, BPER aims to reach the end of the plan with a stable core capital ratio of 14.5%.
BPER said it would invest 650 million euros through 2027 in technology, including artificial intelligence tools.
Reporting by Andrea Mandalà; Editing by Valentina Za and Clarence Fernandez
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
