Banco BPM SpA Q3 2024 Earnings Call Transcript

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

Question: Noemi Peruch - Mediobanca - Analyst : Good evening. Thank you for taking my questions. I have some on the application of the Danish Compromise squared on the (inaudible) deal. First of all, I would like to ask you what is the final size of the equity book of BPM Vita post capital increase that you assumed in the 30 bps impact? And if you could please comment on the treatment that you assumed for the goodwill currently on the balance sheet of (inaudible)? And also, if I may, a third on cost synergies and potential dis-synergies and whether operationally, you are planning to merge some of your businesses into (inaudible)? Thank you.

Question: Noemi Peruch - Mediobanca - Analyst : My question was more about assumption of the first (inaudible) of Anima, if we assume that it were impacted or not?

Question: Noemi Peruch - Mediobanca - Analyst : I was wondering if you assume that the perimeter of Anima will remain the same as it is now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 5:00PM, BAMI.MI - Q3 2024 Banco BPM SpA Earnings Call

Question: Noemi Peruch - Mediobanca - Analyst : The perimeter of annual distribution?

Question: Noemi Peruch - Mediobanca - Analyst : Yes.

Question: Noemi Peruch - Mediobanca - Analyst : Thank you.

Question: Pamela Zuluaga - Morgan Stanley & Co. International Plc - Analyst : Hi, good afternoon. Thank you very much for taking my questions. I have one on results and the other one on the Anima transaction. The first one, we've seen insurance relatively muted until Q2. You were saying last quarter that you expected a delay in the contribution until the fall in (inaudible) of the joint venture. So I was wondering if you could give us some color on the drivers behind the steep jump that we saw in Q3? And how are we expecting this line to evolve into Q4 and into 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 5:00PM, BAMI.MI - Q3 2024 Banco BPM SpA Earnings Call And the second question, in Anima. I imagine that you have already discussed with the regulator, the application of the Danish compromise, of course, for this specific transaction. But I was wondering if there is any limit on how much you can -- how much Anima could potentially continue growing? Could it jeopardize then the application of the Danish Compromise? Thank you.

Question: Pamela Zuluaga - Morgan Stanley & Co. International Plc - Analyst : Yes. I was wondering if there is any limit in terms of the size of Anima for you to apply the Danish Compromise?

Question: Antonio Reale - BofA Global Research (UK) - Analyst : Hi, good afternoon. Thanks for taking my question. First of all, well done to everyone to the management team. I think this is a good (inaudible). And I think, especially at this point of the rate cycle even more so using a regulatory framework, which is, of course, attractive. I have three questions, please. The first one is, a large chunk of Anima's AUMs are mandated by (inaudible) and that constitutes the bulk of the insurance-related assets under management, which I guess are a key part of you being able to make an industrial case for this to be acquired by your life business Banco BPM Vita. So my question is what gives you the confidence that those AUMs from (inaudible) will continue to stick around? The second question, which I guess is related to my first one is have you reached an agreement with the main shareholders of Anima? You've mentioned a key shareholders such as (inaudible)? And lastly, you're clearly aiming at creating a new national champion in Italy, that's, I think, what REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 5:00PM, BAMI.MI - Q3 2024 Banco BPM SpA Earnings Call you put on the slides. And I think that comes with a clear industrial vision. Now does this transaction prevents you in any way from participating in bank consolidation in Italy? Thank you.

Question: Antonio Reale - BofA Global Research (UK) - Analyst : Thank you.

Question: Fabrizio Bernardi - Intermonte SIM - Analyst : Good evening to everybody. And most of my questions have been already answered. I just want to focus on the commercial bias of the deal because, let's say, I understood the Anima is -- was a technically independent asset manager -- which was it's, let's say, the DNA of the company. Now you are bidding for, let's say, at least 67% of the capital and the stock is trading slightly below EUR6 you are offering EUR6.2 on dividend. But my question is different is on the commercial bias of the company. What I'm asking is if you had something like sorry, commercial commitment by the other, let's say, franchises that are, let's say, using Anima in terms of asset under management company in order to, let's say, preserve the NAV -- of the company.

Question: Fabrizio Bernardi - Intermonte SIM - Analyst : Yes, Mr. Castagna, I understand that there is a clear industrial rationale in the deal apart from the fact that you have more or less 20% of the company, but 40% of the NAV of Anima is, let's say, made by Banco BPM. So there is, let's say, a trade off between what you gain and what you are giving to Anima. So the deal is very clear, even the (inaudible) deal is probably goes in the same direction. My fear, if I can, is that the other franchises of distributing products of Anima are doing this not on an exclusive basis, so they technically can sell whatever they want. Anima is just a more, let's say, direct specified access to the franchises. But this does not mean that they can sell like, for example, (inaudible) other products. So this is my only here, but the industrial rationale is pretty fairly clear.

Question: Fabrizio Bernardi - Intermonte SIM - Analyst : Thank you very much.

Question: Hugo Cruz - Keefe, Bruyette & Woods Limited - Analyst : Another question about Animal. I mean the deal looks very attractive if you have 30 basis points capital hit, 14% EPS accretion. And so the premium is not that high. And so you raised the question -- can you pay more? If can you raise your offer if you don't get enough bids? And also, I'd like to understand more your comment about we'll be happy to have other shareholders in Anima? It sounds -- I see the offer is conditioned on getting 66.67% acceptance. But so this mean you're actually not necessarily looking to de-risk Anima you take control? What are your thoughts on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 5:00PM, BAMI.MI - Q3 2024 Banco BPM SpA Earnings Call

Question: Hugo Cruz - Keefe, Bruyette & Woods Limited - Analyst : Thank you very much.

Question: Andrea Lisi - Equita SIM S.p.A. - Analyst : Thank you. Just another question on Anima related to the previous point. What is the possibility of other shareholders to be in -- under Banco BPM? Is the ratio of the 66.7% viable or not? So is there a condition necessary for the offer to go on? This is the first question. Another question is instead on the results of the quarter -- that is on SG&A that were well down quarter on quarter. And I want to ask you if there is something different or something -- some one-off? And what should we expect on the evolution of SG&A going on? And lastly, if you can repeat regarding the net financial result. Is it correct that the assumption overall should be broadly close to zero for the next two years? Thank you.

Question: Andrea Lisi - Equita SIM S.p.A. - Analyst : Thank you.

Question: Lufs Pratas - Autonomous Research - Analyst : This is Luis from Autonomous. The first one is on Anima. Could you please explain the royalty improvement walk from the 13.5% to 17% from this deal? Basically the moving parts on the numerator, but also on the denominator. And my second question is on capital. You indicated in the past that you could think about releasing excess capital only after you book the large puzzle for impact. Could you please confirm if this rationale still holds true at this stage, especially considering this life of for Anima? And if you could also update on the current expected Basel IV headwind and any potential mitigation action?

Question: Domenico Santoro - HSBC - Analyst : A few questions. I need to agree with the colleagues this is a great deal. And probably you are even underestimating was the EPS secretion from Anima. First of all, I want to understand while the new sensitivity that you gave for the NII given that there are the two moving parts. So basically, probably NII will be a little bit lower and the trading a bit higher because of the component that you explained before. Is it fair to say that the EUR100 million loss that you had in the plan in terms of trading profit will probably trend to a breakeven, as I understood correctly? Second, you are also selling if I'm not -- if I'm not wrong real estate at the loss in order to reduce the P&L volatility. So this line of adjustments real estate that was quite large in the past. I'm just wondering what kind of number will trend during 2025 and 2026 maybe closer to zero. And the curiosity on the EUR15 billion that you -- at the moment, you're distributing as probably 30-part products. I'm just wondering what the percentage the level that you are paying back to the -- whatever is the product company at this moment?

Question: Domenico Santoro - HSBC - Analyst : Yes.

Question: Domenico Santoro - HSBC - Analyst : On the opposite, you are going to save money because you move to Anima i suppose. So the question is how much you pay back now to the -- whatever is the product company or the different -- basically providers?

Question: Domenico Santoro - HSBC - Analyst : So the question is this -- line in your plan, how much it was on average across '25, '26? Was trending up to zero?

Question: Domenico Santoro - HSBC - Analyst : All right. And about the trading profit, is that?

Question: Domenico Santoro - HSBC - Analyst : Yes. I mean the question -- yes -- now that basically, you changed the sensitivity, right, of NII. But I guess -- I mean, probably NII will be below -- profit a bit higher. So what could be the guidance next year in 2026? I remember it was EUR100 million loss in the plan? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 5:00PM, BAMI.MI - Q3 2024 Banco BPM SpA Earnings Call

Question: Domenico Santoro - HSBC - Analyst : All right. Okay, thank you. Well done again.

Question: Marco Nicolai - Jefferies International Ltd. (Brokerage) - Analyst : Okay. So a very quick one at this point on EPS creation of the deal. You say 10%, if I got it right, you don't embed any further synergies that you list on page 9. So my question is what's kind of a bull case EPS accretion you can get from this deal if you bake in some of these further optionality for value creation you have in slide 9? I don't know, for example, if you can assume some revenue synergies or because synergies on this deal?

Question: Marco Nicolai - Jefferies International Ltd. (Brokerage) - Analyst : Thank you, and congrats again for this transaction.