Mps, nine months profit runs at 1.57 billion (+68.6%)

Mps closed the first nine months of the year with a profit of €1.57bn, up 68.6% on the same period in 2023, to which the third quarter contributed €407m. The fully loaded Cet1 capital soundness ratio, a note said, rose 28 basis points to 18.3%, including the third-quarter profit and net of dividends, which Mps intends to pay with a pay-out (profit-to-coupon ratio) of 75%.

The Sienese institution speaks of a 'solid growth trajectory in the first nine months, with strong organic capital generation in line with business plan guidance' to which an 'excellent operating performance' contributed.

Gross operating profit rose 13.7% to EUR 1.65bn, thanks to revenues that grew 8.3% to EUR 3.04bn, with the contribution of both net interest income (+4.7%) and commissions (+10.7%), driven mainly by wealth management (+19.6%). In the third quarter, the 1.8% quarter-on-quarter growth in net interest income offset the drop in commissions (-3.9%), which were nevertheless up 12.5% year-on-year. The increase in operating expenses, which rose to 1.39 billion, was limited to 2.5%, with the expense ratio declining to 46% from 48% in 2023. Total funding was up by €5.8bn since the start of the year across all components, while loans fell by 2%, reflecting, Mps said, "market trends".

The cost of credit stood at 52 basis points, in line with guidance. Lastly, Mps finalised the sale of a package of impaired loans with a book value of around EUR 300 million, the economic effects of which are already reflected in the results. Net of this portfolio, gross impaired loans amounted to EUR 3.6 billion, or 4.5% of total loans, while net impaired loans amounted to 2.4%.

Mps is convinced that it will exceed its target of a pre-tax profit of EUR 1.3 billion in 2024. "We have already achieved a pre-tax profit of 1.1 billion which allows us to reach and even exceed our initial target of 1.3 billion also because we expect that the last quarter will not be very different from the average of the previous three quarters," Mps CEO Luigi Lovaglio said in a conference call with analysts, adding that the bank has already accrued dividends of 800 million.