10 May, Il Sole 24 Ore
Banco Bpm continues with the derisking process of its portfolio by preparing to sell NPL for 5 billion by June. In the meanwhile, the group led by Giuseppe Castagna is focused on the profitability as it continues to get the returns from the merger started last year. In the first quarter of the year, the group reported net profits for 223 million, nearly the double of the 15 million registered in the same period of 2017. The result – which is slightly below the estimated 240 million – was impacted by the 176 million capital gain originated from the reorganization of the bancassurance with the transfer of 65% of the joint venture with Unipol and Aviva to Cattolica Assicurazioni.
As already said, the group is focused on cleaning up its portfolio as required by the European Surveillance Authority. The Exodus operation regarding the securitization of 4 billion NPL will be completed by June. The bank counts on obtaining the state guarantee (Gacs) for the operation. The rating for the remaining tranches are expected by May and the company has already launched the contracts with the investors for the mezzanine and junior tranches. As a result of these transactions, there will be only left to transfer by 2020 about 2.4 billion of net impaired loans with NPL representing the 3.3% in comparison with the present 4.9%. The bank has already got rid of 70% of the NPL. For this reason, there is space to “further reduce the NPL stock”, as the Ceo Castagna explained to the analysts. In the meanwhile, the coverage level of the bad loans has risen, thanks to the application of the Ifrs9 related to future transfers of NPL: from 58.9% at the end of 2017 to 66.4% if we include the coverage. An achievement that will give space to new transfers in the future.
In addition, the group starts with an asset base that allows a good freedom of action. The Cet1 net of Ifrs9 (equal to 180 base points) at the end of March was at 12.1%, considering also the contribution coming from the transfer of management mandates of the insurance assets to Anima and the transfer of the depository bank to BNP. Among the clean-up operations, there is also the sale of the NPL platform. On this matter, Castagna confirms to have received offers from several operators interested in the sale “of the platform together with other NPL not included in the planned transfer”.
The bank is also carrying forward its restructuring activity. The new commercial network was launched on 1st January 2018 implying the closure of 312 branches by June, for a total of 483 closures since the end of 2015. In this way, the number of branches goes down to 1,934, getting close to the target of 1,700-1,800 branches.
Returning to the figures, commissions decreased by 7.6% in comparison with the same quarter of last year. The manager explained this slowdown with the comparison with the post-merger peak when the two banks accelerated after they were stuck at the end of 2016. On this matter, the bank is currently in the process of changing its portfolio management model: it will be a more stable scheme based on recurrent fees rather than upfront. The new model should provide the first results starting already from the next quarters.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi