Italy's MPS sees 2023 profit above 1 billion euros after tenfold rise
By Valentina Za
MILAN (Reuters) -State-owned Monte dei Paschi di Siena sees net income climbing to above 1 billion euros ($1.1 billion) this year, after on Friday becoming the latest Italian bank to post above-forecast earnings with an over tenfold yearly rise in profit.
Like peers, Monte dei Paschi (MPS) reaped the benefits of higher rates which have allowed banks to charge more for loans while what they pay out on deposits lags.
It also succeeded in cutting non-staff costs by 8% quarter- on-quarter after shedding a fifth of its employees at the end of last year.
"Cost efficiency is at the heart of our strategy," CEO Luigi Lovaglio said, adding that would help to support operating profit when the boost from higher rates fade.
The bank's cost-to-income ratio was 49% at the end of June, versus 69% a year before.
To fund the voluntary staff exits by sending people into early retirement, Lovaglio oversaw a 2.5 billion euro ($2.7 billion) capital raise in tough markets last November.
By breaking the billion euro income barrier, the former UniCredit veteran would be a year ahead of schedule on the plan to 2026 he presented in June of last year.
STATE SEEKS WAY OUT
The state owns 64% of MPS following a 2017 bailout and Lovaglio is working to relaunch the bank and find a buyer to allow the state to exit.
Shares in MPS traded 3.5% higher by late morning at 2.568 euros each. In November MPS sold new shares at 2 euros each.
Bankers said MPS' improving performance makes it harder to clinch a deal because it makes it more expensive for any suitor, compared with when UniCredit was being offered billions of euros in taxpayers' money to take over MPS.
That deal fell apart in late 2021 because UniCredit CEO Andrea Orcel demanded more than Rome was ready to pay.
Net income for April-June stood at 383 million euros, nearly 13 times the figure of a year ago and sharply above a 217 million euro consensus estimate provided by the bank.
Core capital strengthened to 15.9% of assets in June from 14.9% in March.
Core revenues jumped 10% on a quarterly basis to 941 million euros, leapfrogging expectations, with net interest income nearly doubling from last year and up 15% from the first quarter.
Net fees also edged higher from the previous quarter,
The bank said it had clinched on Thursday the sale of 230 million euros in bad debts, so that gross problem loans stood at 4% of total lending, from 4.2% at the end of December. ($1 = 0.9129 euros)
(Reporting by Valentina Za, editing by Alvise Armellini and Keith Weir)