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On Wednesday, Deutsche Bank (ETR:DBKGn) analysts increased their price target for Banco BPM SpA (BAMI:IM) (OTC:BNCZF) to €11.30 from €10.60, while keeping a Buy rating. This decision follows insights gained during a recent roadshow with the bank’s top management at the 15th Annual Global Financial Services Conference in New York.
The analysts highlighted expectations for a re-rating of Banco BPM stock, driven by anticipated earnings upgrades and progression in the bank’s Common Equity Tier 1 (CET1) ratio. They noted that the market currently undervalues Banco BPM’s business mix, which is trading at a price-to-earnings ratio of 5x, while offering a dividend yield exceeding 10%.
Banco BPM’s CET1 ratio is projected to reach 14% by the end of the year and surpass 14% in the following year. This growth is partly attributed to a potential goodwill transfer to BPM Vita, which could contribute approximately 80 basis points to the CET1 ratio, according to Deutsche Bank’s calculations.
The analysts also pointed to strong cash flow and risk-weighted assets optimization as factors that would further strengthen Banco BPM’s capital position. They suggested that these elements might lead to extraordinary distributions becoming a viable option in 2026.
In summary, Deutsche Bank’s revised outlook for Banco BPM reflects a positive assessment of the bank’s commercial performance, earnings prospects, and capital strength, as discussed during the recent conference.
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