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FINANCIALS: BPER: Underlying Decent Results. M&A Risk Means Spread Neutral.

FINANCIALS
BulletCredit Bullets

BPER Banca (BPEIM: Baa3/BBB- pos/BBB-) 2Q24 results show revenue and loan loss beats with better CET1 (marginally). However, non-performers ticked higher (again) and there’s a cost overrun which we suspect to be exceptional. Assuming it is, there is a pre-tax underlying beat here, also. BPER is a higher-beta issuer, and M&A risk remains ever-present in small Italian banks, but these results feel spread neutral to us.

  • Credit stats: loan losses are 4bp lower q/q (at 39bp), about 6-7bp better than consensus was expecting. Non-performers are 20bp higher (at 2.8%), a similar rate of deterioration as 1Q24. CET1 is 20bp better than consensus (+40bp q/q at 15.3%). So, reasonable credit stats.
  • Revenues were 1% better than consensus, driven by a good NII performance. Costs are meaningfully weaker than consensus but there’s EUR173.8m of “HR-related actions” in here – presumably these are exceptional, but the call will tell us more. This drives the near-25% pre-tax miss. Excluding this, pre-tax would have been a 5% beat.
  • Guidance appears to be affirmed but this is simply comparing the 1H24 run-rate to FY23 figures, somewhat confusingly. We don’t think this is a real guidance upgrade, either way.

Conf call is 0900 (London time) at: https://87399.choruscall.eu/links/bperbanca240807.html

 

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BPER Banca (BPEIM: Baa3/BBB- pos/BBB-) 2Q24 results show revenue and loan loss beats with better CET1 (marginally). However, non-performers ticked higher (again) and there’s a cost overrun which we suspect to be exceptional. Assuming it is, there is a pre-tax underlying beat here, also. BPER is a higher-beta issuer, and M&A risk remains ever-present in small Italian banks, but these results feel spread neutral to us.

  • Credit stats: loan losses are 4bp lower q/q (at 39bp), about 6-7bp better than consensus was expecting. Non-performers are 20bp higher (at 2.8%), a similar rate of deterioration as 1Q24. CET1 is 20bp better than consensus (+40bp q/q at 15.3%). So, reasonable credit stats.
  • Revenues were 1% better than consensus, driven by a good NII performance. Costs are meaningfully weaker than consensus but there’s EUR173.8m of “HR-related actions” in here – presumably these are exceptional, but the call will tell us more. This drives the near-25% pre-tax miss. Excluding this, pre-tax would have been a 5% beat.
  • Guidance appears to be affirmed but this is simply comparing the 1H24 run-rate to FY23 figures, somewhat confusingly. We don’t think this is a real guidance upgrade, either way.

Conf call is 0900 (London time) at: https://87399.choruscall.eu/links/bperbanca240807.html