Banco BPM Spa has reported a record net profit of 943 million euro for the first three quarters of 2023. This figure represents an impressive year-on-year increase of 93.6%. The bank's financial strategy projects its current year's net profit to exceed 1.2 billion euro, equivalent to over 0.8 euro per share, with an anticipated growth to around 0.9 euro per share in 2024.
In a balance sheet approved by the bank's board, the net interest income for the first nine months showed a significant increase of 52% to EUR2.42 billion. This increase was primarily due to a rise in commercial spread caused by increased interest rates and a limited impact on deposit costs, despite the absence of TLTRO loans remuneration benefits this year.
A slight drop of 2.2% was observed in net fees and commissions compared to the same period last year. On the other hand, the cost-income ratio significantly improved from 54.7% to 48.4%, indicating an efficient cost management strategy.
The bank's capital ratios also marked improvement: Common Equity Tier 1 ratio at 14.3%, Tier 1 ratio at 16.7%, and Total Capital ratio at 19.7%. These figures demonstrate a solid capital base, strengthening the bank's position in the market.
In response to Economy Minister Giancarlo Giorgetti's 'Assets' decree, Banco BPM chose not to adhere to the new surplus profits tax. Instead, it allocated 378 million euro, about 2.5 times the tax obligation, into a non-distributable reserve. This decision is aimed at providing financial cushioning for savers.
Despite these positive results and strategic moves, Banco BPM's shares closed Tuesday's session down by 0.8% at EUR4.86. This drop in share price indicates that the market is still reacting to the bank's financial performance and strategic decisions.
InvestingPro Insights
Banco BPM's financial performance is underscored by InvestingPro's real-time data. The bank boasts a market capitalization of $7844.18M USD and a low P/E ratio of 7.52, indicating a potentially undervalued stock. The bank's revenue growth over the last twelve months as of Q2 2023 stands at 15.94%, demonstrating strong financial health.
InvestingPro Tips highlight that Banco BPM has been consistently raising its dividend for three consecutive years, which may be appealing for income-focused investors. The bank's valuation implies a poor free cash flow yield, which could be a concern for potential investors. However, analysts predict the company will be profitable this year, which could potentially drive future growth.
InvestingPro offers many more tips and data points for Banco BPM, providing a comprehensive view of the company's financial performance. These insights can help investors make informed decisions about whether to invest in Banco BPM.
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