Banco BPM is trading weakly in the wake of its results; the ‘Risiko’ game with Agricole fails to spark interest

(Il Sole 24 Ore Radiocor) A session of falls for Banco Bpm, following the publication of its third-quarter and first-nine-months-of-the-year results, which were nevertheless deemed ‘solid’ and ‘above estimates’ by analysts, thanks to reduced costs and provisions. In addition to a general weakness in banking shares, with the sector’s risks still under close scrutiny, the share price is being held back by “less-than-impressive revenue growth” – down 12 per cent quarter-on-quarter and up 1 per cent year-on-year – as noted by analysts at Equita, who reiterate their “hold” rating with a target price of 16.8 euros per share, compared with the current price of around 13.5 euros. “Whilst acknowledging the potential speculative appeal linked to possible deals with Crédit Agricole and, on the whole, modest valuations, we prefer to maintain exposure to names such as Intesa Sanpaolo and UniCredit which, although trading at similar or lower valuations, are characterised by stronger operational momentum, or, like BPER Banca, benefit from more visible catalysts’. On the subject of Crédit Agricole, it should nevertheless be noted that the CEO of Banco BPM, Giuseppe Castagna, has stated that he “sees no proposal of any kind” at present for a merger with Crédit Agricole, but if one were to arise, “it is an opportunity we would examine without any problem, though we will not be the ones to make the first move”. According to Jefferies, Banco Bpm “remains at the centre of speculation regarding mergers and acquisitions in Italia with Crédit Agricole, which has publicly declared its interest in an alliance between Banco Bpm and its local subsidiary, Crédit Agricole Italia. In our view, setting aside the rumours about mergers and acquisitions, the company has fewer catalysts than other mid-cap companies in the sector, whilst its valuation is higher’. Looking at the figures, Banco Bpm closed the first nine months of the year with a record net profit of 1.5 billion, up 2.6 per cent on the previous year, excluding the impact of the Anima acquisition. In the third quarter alone, profit stood at 452.5 million (+0.5%) compared with the 432 million forecast by the market consensus. As for capital strength, the CET 1 ratio stands at 14.27 per cent, after deducting the accrued dividend based on an 80 per cent payout ratio. The third-quarter results ‘exceeded expectations thanks to lower costs and provisions, whilst revenues were in line with forecasts and the net interest margin held up well despite the gradual phasing out of the Ecobonus’, say analysts at Intermonte, who are “reducing their net profit forecasts for the period 2026–2028 by 2.4%–4.6%”. The board of directors has also approved the distribution of an interim dividend of 750 million, equivalent to 0.5 euros per share, an increase of 8.7 per cent compared with last year’s 700 million (0.46 euros per share). The bank has also raised its guidance for the 2026 dividend per share to “over one euro” from the previous indication of “greater than or equal to one euro”. The new dividend corresponds to a dividend yield of 7.5 per cent. Banco BPM, says Intermonte, “continues to offer a generous remuneration policy, with around €4 billion to be distributed over the 2026–2027 period, underpinned by asset quality that is among the best in the sector. However, with more moderate growth in net interest income and the 2027 financial statements weighing on profits, we believe that upside potential remains limited at this stage’. The firm believes that, for 2027, ‘the expected trajectories are likely to generate a pre-tax profit in excess of the plan’s target, and this outperformance should enable the bank to absorb the tax increases introduced by the 2026 Budget Law’. However, the institution highlights the need to assess the potential impacts of the measures to be set out in the 2027 Budget Law and, where necessary, to define the related mitigation measures as part of the new Strategic Plan due by the first half of 2027.