Banco BPM’s profit tops forecast as it weighs insurance offers

By Andrea Mandala

MILANO (Reuters) -Italy’s Banco BPM on Wednesday joined bigger rivals Intesa Sanpaolo and UniCredit in posting a better-than-expected quarterly profit, helped by a surprise rise in net fees and higher interest rates.

Italy’s third-largest bank said its net profit for the three months through June was 206 million euros ($209 million), well above a forecas of 180 million euros in a Reuters analyst poll though down 21% from a year earlier.

Banco BPM, whose largest shareholder is French bank Credit Agricole, said it expected to decide by the end of the quarter over a possible new insurance partnership it would limit to the sole non-life sector.

Credit Agricole and French insurer AXA are the lead contenders for the deal.

Banco BPM CEO Giuseppe Castagna told analysts the bank would keep in full control of its life insurance business after recently repurchasing French partner Covea’s stake in their joint venture, while looking for a non-life insurance partner.

“The first understanding of the non-binding offers is that there’s room to improve our results” in non-life, Castagna said after the board examined initial bids.

Second-quarter revenues stood at 1.12 billion euros, slightly above expectations and down 6.4% compared with the previous year when they had been boosted by trading gains.

Core revenues made up of net interest income and net fees rose both on quarterly and a yearly basis.

Analysts had anticipated a drop in fee income due to difficult markets, but Banco BPM said commercial banking fees had performed strongly, rising 3% quarter-on-quarter.

Banco BPM said it was geared to benefit significantly from rising rates, despite the less favourable terms of European Central Bank longer-term funds, noting that a 100 basis point rise in interest rates translated into a 443 million euro income boost.

Banco BPM said it expected net earnings of more than 40 euro cents per share in 2022 with a payout ratio of 50%.

($1 = 0.9864 euros)

(Andrea Mandalà; editing by Valentina Za and Leslie Adler)