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Investing.com - BofA Securities upgraded Banca Monte dei Paschi di Siena SpA (BMPS:IM) from Neutral to Buy on Tuesday, while raising its price target to EUR9.70 from EUR6.60.
The upgrade reflects BofA’s revised net interest income forecast, which shows an increase for 2026-27 based on a Euribor rate of 2% and hedging strategies. These improvements, combined with lower expected loan loss provisions, are projected to more than offset slight cost increases for the Italian bank.
BofA Securities highlighted a significant tax reassessment that will provide a EUR0.4 billion positive impact in 2025 and EUR0.3 billion in subsequent years, substantially affecting reported net profit figures. The firm maintained its assessment of legal risks, continuing to discount "extraordinary" legal charges of EUR1.3 billion net of provisions.
The increased price target incorporates approximately EUR3 billion of deferred tax assets on a net present value basis, discounted back to 2040. BofA also factored in the bank’s excess capital position, with CET1 levels standing at 19.6%.
The Italian bank’s shares have responded to the upgrade, though specific price movements were not included in the analyst report from BofA Securities.
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