Banco BPM under pressure; Jefferies forecasts a decline in the third quarter

(Il Sole 24 Ore Radiocor) - Banco Bpm is trading lower, as it is, on the one hand, affected by thenegative performance of the entire sector (with the Italia sector sub-index falling as much as -2.07 per cent, and the European one to -1.6 per cent) and, on the other, is being penalised by Jefferies analysts’ assessment ahead of the third-quarter results. The bank’s share price is thus falling (Banco Bpm).

Turning back to Jefferies, analysts expect third-quarter net profit to ‘come in around 2 per cent below the consensus’, at 440 million (down from 581 million in the second quarter), and that ‘CET1 will fall by 20 basis points quarter-on-quarter to 14.2 per cent, mainly due to the mark-to-market valuation of the bond portfolio’. For this reason, whilst maintaining their ‘Hold’ recommendation, the analysts have reduced the target price to 15.3 euros, “reflecting a higher assumed cost of equity, now at 12% from the previous 11.4%”. The analysts also forecast “moderate growth in net interest income (+1 per cent quarter-on-quarter) and an 8 per cent decline in commission income, due to lower performance fees compared with the second quarter and seasonal factors during the summer”.

The rise in bond yields and higher costs for certificates are also expected to have a negative impact on trading income. Furthermore, experts have lowered their EPS forecasts for the period 2026–2028 by 3 per cent, as ‘the assumptions of higher interest rates (we are now factoring in a three-month Euribor of 2.75 per cent until 2028) are offset by lower trading revenues, due to higher costs for certificates, and by other favourable factors”, the report states.

Jefferies also points out that Banco BPM remains at the centre of speculation regarding M&A deals in the Italian banking sector: ‘On the one hand, the main shareholder, Crédit Agricole, has publicly stated its interest in a merger between Banco BPM and its Italian subsidiary, Crédit Agricole Italia; on the other hand, MPS is seeking shareholder approval to launch a takeover bid for Banco BPM’. Beyond the M&A prospects, however, the company “has fewer potential catalysts than other mid-cap banks, whilst its valuation is higher: the estimated price-to-earnings (P/E) ratio for 2028 stands at 9.6 times, compared with 8.3 times for Intesa Sanpaolo and 9.4 times for BPER”.

Banco Bpm’s poor performance follows that of the entire banking sector on the Milan Stock Exchange: from Unicredit , through to Bper Banca and Mediobanca . The key players in the banking crisis are also in the red, after Goldstone Capital Limited, a shareholder in Banca Monte Paschi Siena – backed by Qatari investors – and Fondazione MPS declared their support for the takeover bid by Intesa Sanpaolo for Rocca Salimbeni.