MILAN (Reuters) -State-backed Monte dei Paschi di Siena (MPS) on Thursday posted a smaller than expected 5% quarterly drop in net income due to higher loan loss provisions and lower trading income.
MPS last month shocked Italy’s financial world by launching a hostile all-share bid for bigger rival Mediobanca, seven-and-a-half years after a state bailout that drew a line under a decade-long crisis.
Net profit was 385 million euros ($400 million), sharply down from a year earlier when it had been boosted by a release of funds put aside for legal risks worth nearly 470 million euros.
Favourable court rulings have been a boon for MPS, which has been dogged by lawsuits after years of mismanagement.
Net fees, which have become the focus for banks as they try to counter the negative impact of lower rates on their lending business, grew by 5% quarter-on-quarter, more than offsetting the drop in net interest margin.
In the full year, net profit totalled 1.95 billion euros, beating a 1.82 billion euro forecast in an analyst consensus provided by the bank.
The annual result benefits from 506 million euros in tax credits linked to past losses, which MPS is able to use now that it has returned to churning profits.
MPS CEO Luigi Lovaglio has bet on 1.2 billion euros in tax credits that MPS could release if it has secured at least 50% plus one Mediobanca shares to convince investors in the rival to tender their shares in a deal where the chance for cost cuts is small.
Mediobanca has no branch network and makes money from consumer credit, where it partners with MPS, an investment in insurer Generali, and its wealth management and corporate investment banking businesses.
Touting the benefits of a tie-up, MPS said it had been able to grow its consumer loans by 21% in 2024, and wealth management inflows by 40%.
MPS’ bid for Mediobanca came after the latest stake sale by the Treasury – which now owns only 11.7% of MPS – brought onboard as MPS shareholders two leading Mediobanca investors.
($1 = 0.9626 euros)
(Reporting by Valentina Za, editing by Alvise Armellini and Bernadette Baum)
