Banco BPM SpA Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Antonio Reale - BofA Securities - Analyst : It's Antonio from Bank of America. I have two questions, please. My first one is on loan growth. You're clearly in the wealthiest part of the country and that might explain part of the strong activity levels when it comes to volumes, but you've been gaining market share growing performing loans this quarter. Can you talk a little bit more about what you're seeing both from your clients on the network and from your competitors? And to what extent the market share gains can come without compromising price discipline? That's my first question. My second question is on organic capital generation, please -- but if I may, before I jump on to that, a quick clarification on your capital ratio pro forma after including Anima at 90%. If I'm not mistaken, you would be at around 12.9% CET1 this quarter. I wonder if that's correct. And then with organic capital generation, you'll be above 13% from the next quarter. Now that's a quick clarification, hopefully. And then I come to my second question, which is, I'd like to dig a little bit deeper into the drivers of organic capital generation. You just posted very strong net profit, I think it's your record high quarter with strong core revenues and very low default rates. But then if I look at your slide 23, after dividends paid, your organic generation deriving purely from earnings stands at around 15 basis points, while the majority of the capital growth also going forward, I think is expected to come from DTAs and fair value reserves. And I see there's also strong managerial effort, which I'm sure requires a lot of work. So can you just give us a little bit more color on the quality of this organic capital generation going forward? And how much more of this can be sustained?

Question: Noemi Peruch - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : I have one clarification and two questions, if I may. The clarification is on net profit guidance. Did the EUR1.7 billion included the EUR160 million capital gain from Anima? Or is it only now included in the EUR1.95 billion? And then my first question on common equity. Could you please update us on the additional benefit from reallocating some of the Anima intangibles between banking and insurance business post consolidation? And did you consider the transitional Basel IV risk weight for the insurance business as of now? And if you -- if so, could you please comment on the impact on common equity with 250%. My second question is on M&A. On the press, I think you mentioned that BAMI would remain part of the consolidation process in Italy even if UniCredit walked away. Are you potentially open to assess all scenarios, including takeovers, agreed deals or stake building perhaps.

Question: Noemi Peruch - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : And just one follow-up on the 250%. Am I understanding correctly that you -- since given your structure, you will never apply 250% on a fully, fully loaded basis of Basel?

Question: Giovanni Razzoli - Deutsche Bank AG - Analyst : A follow-up questions on the CET1. You said that you expect, after the consolidation of Anima, to be above 13%. But the comments that you made, bring me to think that you will be well above 13%. You do have the cash flow generation for the next quarter, including Anima. You mentioned the improvement in the other comprehensive income reserves that is the EBITDA. Then if I'm not mistaken, you mentioned in the past also some significant risk transfer actions the possibility to move the goodwill to BPM Vita. And you are already at 13%, let's say, 12.9%. So my understanding is that this is an extremely conservative guidance, where I can be wrong, there could be acceleration of risk-weighted assets? Or what could be the other, let's say, offsetting elements to this, in my view, strong achievement, a potential strong achievement. And the second question is on the commercial performance in terms of placement of investment products, which has been very, very strong, you reached EUR7 billion. I would say that probably this performance was also impacted by some noise around Unicredit offer, which could have an REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 4:00PM, BAMI.MI - Q1 2025 Banco BPM SpA Earnings Call impact on your network. So I was wondering whether you can give us some color also from the month of April if this positive trend is also confirmed given the turbulence we had in April.

Question: Manuela Meroni - Intesa Sanpaolo Equity Research - Analyst : The first one is on your net income guidance for 2025. It has improved. So you already mentioned some changes in the capital gain on Anima. I'm wondering if you can share with us what do you expect to be better compared with what you were expecting in February when you released the first guidance. And we are talking about better volumes, revenues, lower cost or provision or anything that you can share with us? And the second question is, again, on the common equity Tier 1. You already generated 46 basis points from a managerial action. I'm wondering if you still have further room for other managerial action that you want to put in place in the next quarters? And if these managerial actions are going to have any impact on your revenues?

Question: Manuela Meroni - Intesa Sanpaolo Equity Research - Analyst : I was talking about capital, 46 basis points in this quarter.

Question: Delphine Lee - JPMorgan Chase & Co - Analyst : Just wanted to ask you on NII and the interest rate sensitivity, which is reduced to EUR200 million. If you could just -- if you don't mind elaborating a little bit on this. And it seems to me that part of the difference in terms of consensus and revenues that you target is also not just core revenues, but trading and associates and insurance. So just wanted to see on trading. Like if you could give us a little bit of indication, I mean, Q1 was clearly very strong. But in terms of the run rate that you would expect on the trend on that.

Question: Marco Nicolai - Jefferies - Analyst : So on commercial performance and commission, so fees were very strong this quarter. If I compare how much the commission income grew compared to the stock? Let's say, AUM were up 3% year-on-year, but running fees are up 5, and also placements are up 15%, but upfront fees are up 30%. So there has been also, let's say, margin effect on top of the volume effect. Can you give us some indications what is driving it? And if you think it can be sustainable for the future? And also on asset quality, so still pretty solid and overlays increased compared to the previous quarter. But let's say -- so if you are in a scenario where GDP growth lower than expected. Can you provide us with some sensitivities on your cost of risk? And just a clarification, is the cost of risk guidance embedding the 2025 net income guidance 30 basis points.

Question: Ignacio Ulargui - BNP Paribas Exane - Analyst : I just have two, one on costs, and the other one on commercial spread. So starting with cost. I mean, the performance has been very strong, much stronger than what we expected at least. And that has been largely driven by admin expenses 16% in the quarter, although they are flat year-on-year -- sorry, quarter-on-quarter. How should we think about admin expenses going forward? What kind of investments are you planning to have into 2025. And the second one is on the commercial spread. I mean how should we think about the performance of the commercial spread. It's kind of largely done provided a (inaudible) current level. So we should expect some further decline in the coming quarter.

Question: Hugo Cruz - Keefe, Bruyette, & Woods, Inc. - Analyst : Just two quick questions. One is you noticed you didn't show any loan growth in household loans. I wonder if there's any -- if there have anything to do with the pricing conditions in that part of the market, if you could please discuss those? And the second question on the replicating portfolio. Do you still see any room to grow the size of the portfolio further? And the duration 2.8 years seems a bit low. Why are you not pursuing a longer duration?

Question: Hugo Cruz - Keefe, Bruyette, & Woods, Inc. - Analyst : Sorry, you were just on household loans, you didn't show any growth in household loans. And I was wondering if that's because of pricing in that market.

Question: Andrea Lisi - Equita SIM S.p.A. - Analyst : The first one is just a follow-up on the SG&A expenses. You said that it is -- can be seen that are closer to the one of the previous quarter. But if I understood well that in the call, you have said that it is unlikely that on a stand-alone perimeter, they will remain at these levels. So what could be imaging has a reasonable hover at the quarterly level for these expenses? Regarding the evolution of the second question is on the NII in particular, if you can provide us the indication of -- on the lending -- the front book versus the back book. And so if there is still a positive substitution effect on this side. And the very last one, obviously, it is quite difficult to quantify. But clearly in lower interest rate environment, there is room for higher capital gains. And so if it is reasonable or in some way, yes, can be a reasonable report is to assume an average trailing level that is close to the one that we observed this quarter.