Banco Bpm stands out among banks, for Goldman Sachs it is to be bought
Analysts cite regional focus in the wealthiest areas of northern Italy, high profitability, solid asset position, successful management history and attractive valuation as supporting factors
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(Il Sole 24 Ore Radiocor) - In aFTSE MIB decline, Banco Bpm stands out at Piazza Affari in a banking sector that started off weak and is now recovering, with Goldman Sachs analysts recommending buying the stock. Goldman Sachs initiated coverage on the stock with a 'buy' rating, citing its regional focus in the wealthiest areas of northern Italy, high profitability, solid capital position,successful management history and attractive valuation as supporting factors. In addition, the analysts also highlight 'the potential for participation in further consolidation transactions in Italy'.
While not going into the possible M&A theme, Goldman in its report initiating coverage of the stock mentions UniCredit's failure to carry out the transaction and the hypothesis of a merger with Credit Agricole, on which Economy Minister Giorgetti intervened, saying that there are "no political objections" but that there is "the law on golden power". Analysts, for their part, while not expressing any assessment on the possibility of the transaction coming to fruition, "in a hypothetical merger scenario and assuming no overlap in business and no synergy" say that the combined loan portfolio (around €170bn) and deposit base (around €180bn) of the two banks would be comparable to the loan portfolio and domestic deposit base of UniCredit, according to their estimates. "A combined entity would have a market share of around 10 per cent in deposits and loans, a level that we consider similar to UniCredit's domestic share, but still only half that of Intesa Sanpaolo," they explain.
On the organic growth front, Banco Bpm "demonstrates strength in fee generation, a recurring, high quality and low capital absorption revenue stream". Goldman Sachs expects fees to account for 45% of total revenues in 2027, after the acquisition of Anima, one of the highest levels in the industry. The expense ratio improved to 45% in Q2 2025 from 65% in 2017. "Banco Bpm," the experts write, "is at the high end of our coverage for profitability (Rite expected around 20% in 2027, compared to an average of around 15.5%) and capital generation (around 330 bp in 2027, compared to an average of around 260 bp). With a dividend payout of around 80% over the period 2025-27, analysts expect 'an attractive average yield of over 9% over the same timeframe'.
