Banco BPM SpA (BNCZF) (H1 2026) Earnings Call Highlights: Record Profit and Raised Shareholder ...

Negative Points

• Banco BPM SpA ( BNCZF ) faces potential dilution of its stake in Anima Holding, as the 10% minority stake held by Monte dei Paschi di Siena could be affected by ongoing consolidation in the sector.

• The bank's net interest income sensitivity to interest rates remains a concern, with a potential impact of 150 million for a 100 basis point parallel shift, though the timing of repricing is uncertain.

• Traditional banking fees saw a 1.8% year-on-year decline in the first half, partly due to a reduction in ECO bonus-related income, although Q2 showed some recovery.

• The bank's liability spread improvement was partly attributed to a delay in indexed instrument costs adjusting to rate changes, which may not be sustainable in the long term.

• The potential share buyback program, while positive for shareholders, could push Credit Agricole's stake above the 30% threshold, potentially triggering regulatory obligations or a mandatory tender offer.

• The bank's guidance for the second half of the year is expected to be lower than the first half, due to seasonal factors such as August and December being slower periods for fee generation.

• The cost of risk guidance for 2026 and 2027 remains at 43 and 40 basis points respectively, which, while better than plan, still implies potential for higher credit costs if the economic environment deteriorates.

• The bank's exposure to Italian government bonds, while reduced, remains significant at 38.4% of the banking book, leaving it vulnerable to sovereign spread volatility.

• The bank's net financial result benefited from lower costs of certificates and improved trading, but these are subject to market conditions and may not be repeatable in future quarters.

• The bank's capital position was negatively impacted by the Anima acquisition without the Danish compromise, which required rebuilding 240 basis points of capital, limiting flexibility in the near term.

Q & A Highlights

Q: Why did you set the 2026 net income guidance at only 1.95 billion when your first-half results already put you on a run-rate above 2 billion? Also, how quickly will the positive NII sensitivity to higher rates materialize? A: CEO Giuseppe Castagna explained that the guidance is prudent because the second half of the year typically includes seasonal slowdowns (August and December) and the MPS dividend, booked in April, is not repeatable. CFO Edoardo Maria Ginevra added that most of the indexed loan portfolio (about two-thirds) reprices in June and December, so the full impact of higher Euribor rates will be more visible in the second half, with potential further improvements if the ECB raises rates again.

Q: Can you elaborate on the increase in shareholder remuneration from 6 billion to 7 billion? Will you choose between a dividend increase or a share buyback, and what is the expected timing? A: CEO Giuseppe Castagna confirmed the cumulative remuneration target for the plan horizon (2024-2027) has been raised back to 7 billion, implying 4 billion of distribution for 2026-2027. CFO Edoardo Maria Ginevra clarified that the bank must first obtain ECB authorization before announcing the specific amount and form (buyback or dividend). The process will take a few months, with execution expected either late this year or early next year. CEO Castagna added that any buyback would involve share cancellation, which would slightly increase Credit Agricole's stake, but he believes all shareholders, including Credit Agricole, will be happy with the enhanced remuneration.

Q: How did you manage to keep liability costs flat despite higher Euribor rates, and what is your NII guidance for the rest of 2026? A: CFO Edoardo Maria Ginevra explained that the bank was effective in preserving the liability spread through strategic steering of the deposit base, including reducing the share of indexed current accounts from 37% to 35%. He noted that there are second-order effects in the delay of indexed instrument costs adjusting to rate changes. For the rest of the year, the bank prefers to be prudent but expects improvements in Q3 and Q4, with even more evident gains if the ECB raises rates further.

Q: What is your outlook for the cost of risk for 2026 and 2027, given the strong credit quality performance? A: CEO Giuseppe Castagna stated that the bank is performing better than the business plan, which assumed a cost of risk of 43 basis points for 2026 and 40 basis points for 2027. He attributed the improvement to enhanced loan monitoring, early warning detection, and efficient disposal capabilities. With a low NPE stock and significant state guarantees, he finds it difficult to envisage high maintenance costs, with future costs mainly coming from potential default rate increases.

Q: Regarding the potential combination with Credit Agricole Italy, do you think it could generate value for Banco BPM shareholders, and is it politically acceptable? A: CEO Giuseppe Castagna clarified that the decision not to pursue the MPS merger was made unanimously by the board, including Credit Agricole-appointed members, due to timing constraints after Intesa's official offer. On a potential Credit Agricole merger, he stated that from an industrial point of view it is a very solid combination, but any transaction must be in the interest of all Banco BPM shareholders. He declined to speculate on the government's position, noting there are rules and opportunities to respect.

Q: Can you provide an update on the Anima stake and the impact of the MPS situation on the distribution contract? A: CEO Giuseppe Castagna confirmed the distribution contract with MPS lasts until 2030 and expressed confidence that MPS, whether standalone or in any other configuration, will respect the agreement. He noted this is a B2B2C business involving hundreds of thousands of clients, and any decision-maker would be careful not to disappoint them by forcing changes to investment products they have used for 15-20 years. Regarding the 10% stake, the bank will decide based on MPS's final situation after the consolidation process.

Q: What drove the strong recovery in traditional banking fees in Q2, and what is the outlook for this line? A: CEO Giuseppe Castagna explained that the recovery was driven by specialized activities, including structured finance, trade finance, and investment banking, which recovered the gap versus the first half of 2025 with strong Q2 growth. He noted that product factory contributions remain solid, but the second half typically sees a small reduction in total fees, particularly investment fees, due to seasonal factors like August and December.

Q: Can you explain the capital impact of the MPS stake, including the hedging structure and the sensitivity of reserves to BTP spreads? A: CFO Edoardo Maria Ginevra explained that the MPS stake is a financial stake below 10%, risk-weighted until the total of such stakes reaches 10% of total capital, with any additional amount deducted from capital. The hedges are designed to be far out of the money and reduce the total level of the stake in the calculation. He noted that when the MPS price increases, there is a capital benefit, but this could be offset by higher risk weights or deductions. For BTP sensitivity, he referenced the presentation's figure of 690,000 basis point value for Italian government bonds in the FVOCI component.

Q: What is driving the slight decline in running fee margins, and can you provide the reserve sensitivity to BTPs? A: CFO Edoardo Maria Ginevra explained that the running fee stability is partly a matter of composition, with an increase in the mutual fund running fee component offset by a small reduction in assets under administration. For BTP sensitivity, he later confirmed the key number is the 690,000 basis point value for Italian government bonds in the FVOCI component, as provided in the presentation.

Q: Regarding the additional remuneration, would you consider increasing the ordinary payout or just an extra dividend, and what are the moving parts for capital generation? A: CEO Giuseppe Castagna reiterated that the bank has been open about the type of authorization it will seek to increase total shareholder remuneration to 7 billion. CFO Edoardo Maria Ginevra added that the ordinary capital path is expected to remain stable, with DTA benefits and retained earnings compensating for business expansion. He also confirmed the bank is planning to proceed with one additional synthetic securitization transaction.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .