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Investing.com -- Mediobanca shares fell on Thursday after the Milan-based lender, recently acquired by Banca Monte dei Paschi di Siena, reported third-quarter results showing softer performance in its corporate and wealth management divisions despite posting earnings that slightly exceeded forecasts.
The bank reported a net income of €291 million for the quarter, or €322 million on an adjusted basis, compared with consensus estimates of €285 million.
Analysts at Jefferies in a note said the “impact that the lengthy tender offer process has had on the business,” adding that the effects were “particularly evident in the CIB and WM units.”
Net interest income declined 3% quarter over quarter and 1% year over year to €479 million, affected by lower corporate and investment banking volumes and higher deposit costs. Fee income totaled €232 million, down 8% from the prior quarter and flat compared to the previous year.
Within divisions, corporate and investment banking fees dropped 14% quarter over quarter and 4% year over year, while wealth management fees fell 10% from the prior quarter but rose 3% on a yearly basis.
Consumer banking was the only area showing expansion, with fees increasing 17% quarter over quarter and 13% year over year.
Operating expenses decreased 12% from the previous quarter but were 3% higher year over year, indicating controlled costs amid the bank’s integration process.
The cost of risk rose to 51 basis points, up from 35 basis points in the second quarter, with about €10 million in provision overlays used in consumer finance. Jefferies noted that the figure was “broadly in line with expectations.”
The bank booked about €31 million in post-tax one-off charges tied to the tender offer and the acceleration of share-based payment schemes following the change in control. These items weighed on overall profit but were described in the report as temporary.
Across business segments, consumer finance improved on earlier revenue trends, while the wealth management and corporate investment banking divisions recorded slower activity.
Total revenues came to €868 million, a 9% decline from the prior quarter and flat year over year. Pre-provision profit stood at €486 million, down 6% quarter over quarter.
On the balance sheet, Mediobanca’s customer deposits rose 2% from the previous quarter and 10% year over year to €31.1 billion, and total assets increased to €104.6 billion, up 1% sequentially and 7% annually.
The Common Equity Tier 1 (CET1) ratio improved to 15.8% from 15.1%, supported by the removal of a buyback plan. The gross nonperforming loan ratio edged up to 2.2% from 2.1% the previous quarter, while coverage remained steady at around 60%.
Jefferies said that despite weaker short-term trends, Mediobanca’s “franchise strength appears to have been maintained,” citing “increased deposits and total financial asset balances,” and a higher employee count from the prior quarter.