Banco BPM raises dividend as profit outstrips forecasts

Andrea Mandala
Updated ·2 min read
FILE PHOTO: A woman walks in front of the Banca Popolare di Milano (BPM) bank in downtown Milan

By Andrea Mandala

MILAN (Reuters) -Banco BPM confirmed its 2023 net earnings per share and raised its dividend for 2022 on Tuesday, after higher interest rates helped it beat fourth quarter profit forecasts.

Italy's third-largest bank said its net profit for the three months through December more than doubled from a year earlier to 210 million euros ($225 million), well above a 178 million-euros forecast in a Reuters analyst poll.

Income from Banco BPM's core lending business rose 31% quarter-on-quarter, reaching 2.3 billion euros for 2022 and more than offsetting a weakening in fees at the end of the year.

Banco BPM Chief Executive Giuseppe Castagna told analysts that net fees would be broadly flat this year, while net interest margin was projected to rise 17% to 2.7 billion euros, assuming an average interbank rate of 2.5% in 2023.

With a business model geared towards lending to Italy's myriad businesses, Italian banks are well placed to benefit from the European Central Bank's monetary policy tightening.

Banco BPM said it expected 2023 net earnings of above 60 euro cents (EPS) per share, sticking to its latest guidance which it had raised in November from a 49 euro cent EPS goal set under its business plan.

Castagna told analysts that Banco BPM now saw its 2024 EPS at around 75 cents, raising its previous estimate.

Banco BPM is seen as a potential takeover target for both Credit Agricole, which has become its single biggest shareholder, and UniCredit, which studied a takeover offer on the eve of the Ukraine war but did not follow through.

The bank's shares have risen by 47% over the past year.

Banco BPM said it would propose a dividend per share of 23 euro cents on 2022 earnings, up from 19 euro cents for 2021.

($1 = 0.9343 euros)

(Reporting by Andrea Mandalà; Editing by Valentina Za and Alexander Smith)

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