MILAN (Reuters) -Italy’s BPER Banca, which has bid to buy rival Popolare di Sondrio, said net revenue would decline only slightly this year despite lower interest rates, with fee income helping to cushion the hit.
Italy’s fourth-largest bank, which in February launched a 5 billion euro all-share bid for the Sondrio-based smaller rival, on Thursday posted a higher first quarter profit, stripped of one-off items, thanks to fee and trading income.
It forecast a ‘mid single digit’ increase in net fee income this year. By contrast, the net interest margin is expected to shrink by a similar percentage, leading to revenues of around 5.4 billion euros, compared with 5.6 billion last year.
Net of one-off items, first quarter profit rose 43% between January and March, to 443 million euros ($501 million). It was down on a reported basis.
In the first quarter, total revenues reached 1.4 billion euros, growing 5% year-on-year. The net commission income surged by 8.5% supported by substantial growth in gains from sales of asset management and insurance products.
The narrowing spread between lending and deposit rates pushed the net interest margin down 3.8%.
BPER in February said it was moving to acquire Popolare di Sondrio to protect its position in the sector as a round of takeover bids reshaped the industry.
At current prices the bid’s value entails a 3.6% discount to the market.
($1 = 0.8845 euros)
(Reporting by Andrea Mandalà; Editing by Valentina Za)
