Earnings call transcript: Banco BPM sees strong growth in Q2 2025

Banco BPM reported robust financial performance in the second quarter of 2025, driven by strategic acquisitions and operational efficiencies. The bank’s stock has surged 51% year-to-date, nearly touching its 52-week high of €13.00. Despite a slight decline in net interest income, the bank’s overall performance remained strong, with significant growth in net income and a solid outlook for the remainder of the year. According to InvestingPro, the bank maintains a GREAT financial health score, with particularly strong momentum metrics.

Key Takeaways

• Banco BPM’s net income reached €1,210 million for the first half of 2025, achieving 62% of its full-year guidance.
• The ANIMA acquisition contributed significantly to asset management growth, increasing assets under management by €155 billion.
• The bank’s CET1 ratio stood at 13.3%, surpassing its plan target and reflecting a strong capital position.
• Banco BPM maintained its full-year net profit guidance at €1,950 million, with expectations for a double-digit increase in net fees and commissions.

Company Performance

Banco BPM’s performance in Q2 2025 demonstrated resilience amid challenging market conditions. Trading at a P/E ratio of 8.08x and showing impressive revenue growth of 14.17% over the last twelve months, the bank reported a 31% year-on-year increase in like-for-like net income to €984 million. Total revenues grew by 3.2% like-for-like to €3,000 million, underscoring the effectiveness of its strategic initiatives. InvestingPro analysis suggests the stock is slightly overvalued at current levels, with dozens of additional metrics available to subscribers. The bank’s transformation into a capital-light model, emphasizing wealth management and asset protection, has begun to yield positive results.

Financial Highlights

• Revenue: €3,000 million, up 3.2% like-for-like
• Net income: €1,210 million for H1 2025
• Net interest income: €1,600 million, a 7% decline year-on-year
• Net fees and commissions: €1,200 million, a 4.4% increase

Outlook & Guidance

Banco BPM’s management remains optimistic about the future, maintaining its full-year net profit guidance at €1,950 million. The bank anticipates a mid-single-digit decline in net interest income but expects a double-digit increase in net fees and commissions. Additionally, Banco BPM has projected a dividend of €700 million, marking a 17% increase, with the current dividend yield standing at an attractive 9%. For deeper insights into Banco BPM’s valuation and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro.

Executive Commentary

CEO Giuseppe Castagna highlighted the bank’s transformation, stating, "We are transforming from a pure commercial bank to a more capital light model." CFO Eduardo Ginebra emphasized the bank’s proactive approach to capital management, noting, "We continue to be very active on various fronts for improving our capital position."

Risks and Challenges

• Declining net interest income could pressure future profitability.
• Integration challenges following the ANIMA acquisition may arise.
• Macroeconomic uncertainties could impact lending growth.
• Regulatory changes in the banking sector pose potential risks.
• Competitive pressures from other financial institutions may affect market share.

Q&A

During the earnings call, analysts inquired about Banco BPM’s capital generation strategies and future M&A opportunities. The bank’s leadership addressed these concerns, emphasizing the strategic importance of the ANIMA acquisition and the drivers behind net interest income growth.

Full transcript - Banco Bpm SpA (BAMI) Q2 2025:

Conference Operator, Chorus Call: evening. This is the Chorus Call conference operator. Welcome and thank you for joining the Banco BPM Group H1 twenty twenty five Results Presentation. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

At this time, I would like to turn the conference over to Mr. Arneris Casi, IR Manager of Banco BPM. Please go ahead, sir.

Arneris Casi, IR Manager, Banco BPM: Good afternoon, everybody, and thanks for joining the Banco BPM Alfea results conference call. Giuseppe Castagna, our CEO and Eduardo Gineva, our General Manager and CFO, will take you through the presentation, which will be followed by Q and A session. Please just let me remind you to limit to maximum two questions each. I will hand over to Mr. Castagna.

Giuseppe Castagna, CEO, Banco BPM: Good evening, everybody. Welcome to our H1 presentation. Very happy to give you this presentation, which is full of good results and state of art of our business plan target already reached in our H1. First of all, very good net income at an all time high at 1,210,000,000, well on track on our target of this year, 1,950,000,000. Very good news also from capital.

Remember that we had a guidance over 13%. We are already at 13.3% of CHET one. Also, of course, this will be the first presentation which we have also consolidated from the second quarter ANIMA results. So I will try to give you both figure, one like for like without ANIMA contribution and of course the stated one, which includes also ANIMA contribution, which mean Q2 contribution plus the one off on capital gain. Let’s start from net income, 31% like for like increase from EUR $750,000,000 of H1 last year to almost EUR 1,000,000,000, EUR $984,000,000 this first half of the year to which we have to add the EUR $230,000,000 of global contribution of Anima.

Let’s say that these accounts for 54,000,000 being the contribution of Q2, 200,000,000 being the capital gain and minus 25,000,000 which are the cost of both the successful OPA and the abandoned OPS. For a total, net income of more than EUR 1,200,000,000.0 in six months, which represents 62% of our guidance of almost EUR 2,000,000,000, 1,150,000,000.00 for 2025. Again, the guidance has already been overcome by our common equity Tier one. And this is all these results, I would say, are thanks to our the confirmation of our model to be very close to our client, our territory and is well represented by the growth that we had bought in new lending for EUR 15,300,000,000.0 in the first six months of the year, which represent 50% more than the same period last year. And also the sales of investment products, which is 12% plus year on year.

Very good performance also on the management of our credit portfolio, which declined 23% year on year. And if we exclude considering net NPE, the loans with state guarantee, which we don’t want to sell because they’re very much well covered then we can cash all the difference. We are below 1%, 0.84%. We confirm the interim dividend also for this year, which will be approved by the board in November and be paid the same month during 2025 for a total consideration of EUR 700,000,000 even though we have already accrued in the first half of the year 800,000,000,000 of potential dividend to be distributed. Page seven, let’s consider what happened to our bank with ANIMA consolidation to confirm the successful strategy that we had in launching the public offer on ANIMA.

We have our group now handling €155,000,000,000 of asset under management on top of the more than €200,000,000,000 of the bank with a total consideration of €383,000,000,000 managed by the group. Also the contribution to the fees and the net fees, net income is very considerable. We increased with ANIMA on a pro form a basis 23% net fees and 11% net income of the group. Another very important target that we have already reached, which was one of the main target for 2027 of our business plan was to even the contribution from a non NII to the one given by NII. I’m sure you remember that our target was to reach 50% of non NII.

Let’s say that after first half of the second year of the plan, but the first year with the animal inside, we are already at 49% of non NII on total revenues contribution and also the contribution to net income from wealth management, asset management and protection is already at the level target level of 35%. Very consistent is also the increase of both return on equity, return on tangible equity respectively to 1722.6%. And also the pretax and pre one off profit contribution is already at level of the final year of the business plan. So we are already at €1,600,000,000 vis a vis point $5.07 €7,000,000,000 being an average of the results of 2027. The contribution comes from very solid growth in revenues.

As you can see on the left, we grew notwithstanding 100 20 four reduction in NII year on year. We grew non NII €213,000,000 for a total consideration €2,883,000,000 which is 3.2% like for like growth to which we have two other contributions second quarter of Anima, which is EUR 141,000,000 ending up to more than EUR 3,000,000,000 in the first half of the year. Again, the non NII revenues grew from 38% in the 2024 to 45% like for like. And if we have a pro form a consolidation of ANIMA for all the year, we are already, as I mentioned before, at 49% of contribution. This was coupled by very strong cost control.

We reduced our cost from 2.6% like for like And we are basically at the same level of cost of 24%, even if we include the cost related to ANIMA for the second quarter. The same we can say for the declining provision, which went down 24% from $250,000,000 to €163,000,000 which comes from a reduction of LLPs from 194,000,000 to 164,000,000 and basically to reduce it to zero the other provision mainly on real estate. On page nine, this was coupled again by very strong capital position. We started, as you know, with 15% of end of last year. We had to face two very strong reduction coming from the Anim acquisition, of course, after the denial of the application of Danish Compromise, which accounted for two forty two basis point and regulatory headwinds for 62 basis point mainly related to Basel III.

This ended up our capital to 12% to which we were able to add both with organic capital generation and the managerial action, mainly I would say regarding on the fair value on comprehensive income, DTA and so on, the level of the capital above the 3% to 13.3%. The same comes from MDA buffer, which grew from an average level that we mentioned Q1 of three fifty basis point to almost three eighty basis point. Let’s see generally speaking, you know that our business plan has been done with a strong thought of transforming our bank from a pure commercial bank into a more consolidated bank with all the product factory contributing to the final results. And of course, in order to do that, it takes time, but we were very quick to reach some of the target already for I guess for ’27 already in the first half of the year. Notwithstanding that, there is still a long way to complete.

And we want just to say that for the different product factory that we consolidate, let’s say in the last three years, 2023, 2024 and 2025, we are still halfway, I would say to the final full steam that we think can be can happen starting from 2026. For the different product factory, let’s say that the life insurance that we integrated in 2023, but we had the opportunity only to switch in terms of IT system during the 2025. We have completed the migration very successfully. Meanwhile, our joint venture P and C is still under migration, which is to be completed in 2025. This is just to say that these are very long consuming time transaction, which are already giving very good result to our bank, but still have to perform in the terms that we forecast in the business plan because still has to bring more value to our bank.

The same we can say for the payment system found on NUMYA joint venture with Ikria and FSI as the transaction was completed in 2024. We worked a lot last quarter twenty twenty four, the first quarter twenty twenty five to complete the POS migration, which is completely successfully completed. But we are now starting with the issuing migration. So the issuing of credit cards to our clients. And this will take for the whole ’25.

So again, the full steam will be in ’26. Last but not least, ANIMA, which was announced, the cash offer was announced in the 11/06/2024, as you know, has been completed April 25. This is the first quarter in which we consolidate ANIMA. And the number are already very loudly speaking, but still we think that with all the synergy, we can have full steam again in ’26. So I would say very good result up to now, but it’s a long work and we have to wait maybe another year to see better and stronger results that we expect.

Let’s have a look to the roadmap to the plant target. As you know, we plan to terminate 2027 with €150,000,000 of net profit. We have on the right side of the Slide 11 split in two, of course, half one and half two compared with H1 2025 pro form a, which means consolidating ANIMA for both quarter, not only for the one that is stated, not considering of course the one off and comparing this figure with our final plan target. As you can see, revenues are almost there. We have a performance EUR 3,150,000,000.00 as total revenues compared to 3,180,000,000.00 of the target of the plan, which is we are slightly above in terms of NII, 30,000,000 above, slightly below €70,000,000 below in terms of fees and commission.

This is why I explained to you that the roadmap for the increasing of volumes of the product factory are still to come. With the core revenues, which are 3,100,000,000 vis a vis EUR 3,160,000,000 with noninterest income contribution of 49% compared with 50% of the plan and operating costs, which are already at the level of the 2027 plan target. Cost income is already there, 44%. We are below in terms of cost of risk with the net income excluding one off and by far minorities, which is almost €1,060,000,000 compared to €1,075,000,000 of the business plan. So still some room, but very close to the final target.

Let’s have a look on Page 13 to the main figure of our H1. Of course, we are comparing like for like in the first two columns and we just put also the stated number on the fourth column of the slide. I will comment of course only the like for like. We are 7% below in terms of net interest income. If you consider the NII at full funding costs, which mean including the cost of the reduction that we experienced, cost of certificates, the total NII cost has been 4.2% below last year results.

And this 4.2% has been completely replaced by increase of 5.4% in terms of net fees and commission, which grew 4.4. Let’s say that we had also a very strong increase in terms of income from insurance from €25,000,000 to €80,000,000 We had a good net financial result from minus 76,000,000 to plus 46 and this brought total revenues 3.2 vis a vis H1 2024. We already spoke about the deduction of 2.6% in terms of operating cost, which brings the pre provision income to plus 8.5%. We experienced some reduction in total provision. So we grow the contribution profit from continuing operation pre tax to 14% and post tax to almost 18% more than the first six months of ’24.

Of course, ’24 was impacted from the last tranche of systemic charge. So we end up with a 31% of increase like for like accounting the net income to EUR $984,000,000. Meanwhile, including Ghanima, we reach a net profit stated of EUR 1,200,000,000.0. On the right side, you’re going to see the main trends, ’23, ’24, ’25 both of course compared with the first H1 of each year. And you see that the growth and the improvement was good in all the main line of the profit and loss.

Revenues grew almost 12%, cost income went down four full point percentage point. LLP were down 36% and the net profit from continuing operation was up 42%. Let’s go through some items. NII, 1,600,000,000.0, the results of the year, minus 7% year on year. Meanwhile, we have the Q2 compared to Q1 at only 3.9% below.

If we exclude a one off over Q1 related to interest on a previous litigation, we have like for like an increase of 1% also Q2 on Q1 on net interest income. Let’s consider how these six months results come from a reduction of renewable, which in 2024 was 3.87 and was down to 2.33% in H1 twenty twenty five. The sensitivity would have brought down more than 200,000,000 our results, but we were able to recover 91,000,000 through managerial action. Through managerial action, excluding one off, we have already recovered 65,000,000 out of the 100,000,000 we said in our presentation of the strategic plan, we would end up 2027. So almost two thirds of the recovery has already been done in the first six months.

Let’s pass to the trend commercial spreads. Spreads are doing much better than the reduction with Uribor. As you can see both year on year compared with Q2 twenty twenty four, we have had Uribor down 170 basis point with the commercial spread down only 118 basis point. Meanwhile, Q2 and Q1 twenty twenty five, the reduction of sorry, of Q2 twenty twenty five to Q4 twenty twenty four. So in the last six months, the reduction of the Euribor was 91 basis point.

Meanwhile, we managed to reduce commercial spread only 66 basis point On the bottom side of the right part of the slide, you will find the update on the managerial action that you will know. We have increased our replicating portfolio to EUR 26,500,000,000.0, up from 22,000,000,000 end of the year with an average receiving yield of 2.1 and the duration of two point seven years. The share of index current account stayed at 36% compared with 34% full year. And you can see also some indication about the low cost of wholesale funding that we are experienced. Thanks to the better perception of our risk profile confirmed by the rating agency also after the abandon of our OPS very recently.

We will tell afterwards some detail. But the reduction of the spread, as you can see, is really massive contributing to the bettering of our results vis a vis the final target of the industrial plan. We have been reaching these results continuing to do the work supporting our client, our territory, putting all our effort in serving our corporates everyday clients, which led us to increase 50% of the new lending granted Specifically, we increased the lending to household. So the mortgage side to private individuals 68% year on year and almost 40% of the new lending to small business. And the new lending to small business has been 59% guaranteed by state guarantee vis a vis 52%, which was the average in 02/2024.

The stock of performing loans basically has the same level of end of the year, but this is just because we reduced the 1,600,000,000.0 our exposure to some institutional big ticket. Meanwhile, both in the household, grow 1% in the stock and in non financial corporates, we grew 1.8% toward the end of the year. All in all, 52% of non financial corporate portfolio is secured, 27% with state guarantee and 25% with collateral. In terms of direct customer funding, this is driven by deposit, grew from €100,000,000 to €101,900,000,000 Meanwhile, the certificates reduction was €400,000,000 bringing the total direct customer funding to €107,300,000,000 On Page 16, let’s have a look to the growth of the commission. Like for like, we grew 4.4%, but normalizing for the reduction in the echo bonus and the instant payments, we have a growth more than 7% year on year.

And of course, the stated results is much higher because we consider also the integration of ANIMA to EUR 1,200,000,000.0. If we would consider a pro form a with the full consolidation of ANIMA for the first six months, the contribution on net fees would go up to EUR 1,340,000.00. Our growth was mainly in investment product fees, which grew 12%, which is exactly the growth that we experienced in the investment product placement going from 10,600,000,000.0 in six months ’24 to almost 12,000,000,000 in six months ’25. Let me assure that also in July, we had investment product sales for 2,000,000,000, which is exactly the average of the first six months. Going to the details, front fees grew by 27%, running fees 3%, to which we have to add the 140,000,000 coming from the second Q of ANIMA consolidation.

Very strong results also on other fees even though it appears to be flat, but just consider that we have almost 30,000,000 less in the first half twenty five coming from the reduction of the fiscal credit fees, the famous echo bonus, and the impact of the instant payment. This reduction was completely offset by the other fees, mainly fees from specialized activities, meaning corporate investment bank structure trade finance, which grew from EUR 140,000,000 to EUR 176,000,000. Let’s have a look to the number with consolidation of Anima over the indirect customer funding, which grew €3,000,000,000 like for like without Anima from €160,000,000,000 to €119,000,000,000 And of course, as I mentioned before, up to $275,000,000,000 consolidating ANIMA, of which EUR $222,000,000,000 of assets under management and EUR 54,000,000,000 of assets under custody. It’s worth to notice that there is EUR 1,000,000,000 growth higher than last year of net net flows of assets under management growing from EUR 300,000,000 last year to EUR 1,300,000,000.0 of this year. The cost income again, a good reduction 2.6% bringing the cost income down from 48% to 45.2% like for like, 44.6 we include in Ganima.

Basically with the flat contribution from the staff cost, let’s remind that the main impact of the early retirement scheme will appear in the second half of this year, which will amount in a saving of EUR 40,000,000, of course, more than offsetting both the new labor contract and also the new hiring that we continue to make. Very good results also in other administrative expense and D and A with a total reduction of 7.8%. Cost of risk down to 33 basis point, driven by all the credit management over the life cycle, meaning very strong credit policy in granting new loans, mostly granted by the state, very effective management throughout the life of the loan with all the attention to the deterioration possible deterioration of credit and early intervention in order to minimize the potential effect of the cost of credit. This brought us to a reduction of 23% total MP year on year. And excluding the MPEs with state guarantee, we have a reduction almost 30% year on year.

Let’s consider on the bottom side on the left of the page 19 that the net bad loan excluding state guarantees represent only 0.2% of total new loans. This is basically to make, evident that we basically don’t have any other net bad loans other than the one who are guaranteed by the state. On the right side, some figure about ratio, cost of risk again down to 33 basis points, default rate better into below 1% to 0.9, good increase in cure rate to 7.5. And also the coverage, which appear to grow also on the total MPs, Again, on the right side, if you exclude the state guarantee, the the the MP guaranteed by the state, we increase the coverage of the other bad loans from 73% to 75% of UTP from 41.4 to 41.9 and globally to grow to 40 53%, the full coverage of the other loan not guaranteed by the state. Let’s give the floor to Eduardo Ginebra, which will direct you through the financial and capital issue.

Eduardo Ginebra, CFO, Banco BPM: Thank you, Josep, and good evening, everyone. So in Page 20, we see the contribution of the financial part of our balance sheet, both to capital and low financial activities to P and L. So in terms of contribution to capital, our negative reserves are down now to $335,000,000 on a net basis, thanks to the reduced from the initial level in the beginning of the year of 500,000,000, thanks to the active management of our bond portfolio. Similarly, we had a positive trend in unrealized losses on debt securities amortized cost, which is now almost at zero, minus 27,000,000 June. And we worked actively to improve the resilience of the contribution of net interest of our bond preferred net interest income, increasing its BPV now at 2,000,000, 2,100,000.0, of which only 800,000.0 coming from Italian government bonds.

Net financial result is now at 72.7% million in the quarter stated thanks to various factors among which it’s important to notice the dividend that we received from Monte Basqui, the 97,000,000, more than 97,000,000, the active management of our bond portfolio, the reduction in the cost of certificates, which one year ago was EUR 75,000,000 per quarter. Now it’s near to half that amount at only EUR 41,900,000.0, thanks to both the reduction rates and the improvement in our credit spread. Page 21, quite flat. The evolution of the portfolio versus the previous quarter, you may observe that all data are very stable, 46.7. The total, 8.5 corporate and non government bonds, 38.2 of government bonds, 69% the amortized cost component.

Finally, Italian government bonds remaining below 40%, exactly at 38.9%. Liquidity in this environment significantly. Now we have a cash plus unencumbered assets at four almost $454,000,000. This owing to the evolution of eligible assets especially. Total direct funding is at 139,000,000 35,000,000 with 4,000,000 increase in bonds that we should, that we have in our balance sheet, whose success was facilitated also by the improvement in our standing with the credit rating agencies.

So DBRS updated our rating to BBB high in April. Recently, and P, Moody’s, and Fitch, all the three of them upgrade our outlook to positive. And this very important to note, this was after the conclusion, after the withdrawal of the offer of the tender offer on our shares. So with no external support, so to speak so to speak. LCR, it’s now up at 160%.

NSFR, 827%. Net ECB position is slightly below 9,000,000,000. MREL buffer, almost at 8%, 792 basis points. Bear in mind that we have observed also from an MREL perspective, the impact of the acquisition of Alima with no Danish Compromise. And talking about this impact, let’s recap the evolution of capital to that very strong 13.3 that we are printing in June.

So we started in March at 14.76. Then performance in this quarter, and I’m talking about organic sorry, recurring performance, not accounting for the 200,000,000 of revaluation in the stake of Anima, allowed to bring 85 basis points positive contribution. 72 basis points are the part that is dedicated to the payment to the dividend that is maturing during this quarter. 41 basis points is the contribution of DTAs and February comprehensive income reserves apart from other minor points, other minor contributors. Our support to the economy, thanks also to the quality high quality mix of the new lending and to the contribution of state guarantees is costing only nine basis points in terms of reduction in capital.

Acquisition of Anime gives 189 basis points on top of the 53 already booked in q one, leading to the total two forty two that we’ve shown in the previous slide. So coming at the end, resulting in the end to 13.32, which is more than 30 basis points above the plan target. MDA and CET1 buffer on the right part of this slide have been reduced following not only the decrease in c t one ratio, but also the systemic risk buffer increase, the phasing of this systemic risk buffer that was introduced one year ago by Bank of Italy and was planned to enter into to to to be adopted in two separate installments. So now the buffer is at 379 basis points, well above the planned target. One final point on this slide is that this contribution that I mentioned from DTA and Fabrylov, the comprehensive income is inorganic capital generation that the bank will continue to materialize in the coming quarters.

So until the end of the plan, we expect to generate capital with this source for a comfortable 140 basis points. Now final remarks. Page 25 is an updated presentation of our guidance in terms of profitability and the confirmation of the interim Guidance is confirmed on net profit as far as net profit is concerned at 1,950,000,000.00 despite further declining rates. Now we’re modeling a full year arrival, which is very close to the 2% that is the end state of our strategic plan. 62% of this 1,950,000,000.00 have been already achieved in the first half of this year.

And to get the remaining 38%, we’re expecting a single digit mid single digit decline in NII at full funding cost, so including the certificates, double digit increase in net fees and commissions, which will, of course, enjoy the benefit of the contribution for ANIMA for the total part of second half of this year instead of just one quarter as in the first half, a continuation in the reduction in the trend in cost income and a significant reduction in provisions, again, in the comparison with last year. As already mentioned in the beginning of the presentation, the guidance of the dividend is EUR 700,000,000 compared to the EUR 600,000,000 the previous year, zero four six per share is expected dividend per share. This would be confirmed or finally defined by the board in November when also the payment date is expected. An increase of 17% versus the previous year. We are in total at 2.2 dividends, including this EUR 700,000,000, which means that we are at proceeding at the right pace towards our target of EUR 6,000,000,000 until 2027.

The dividend yield is a strong 8% following also the very good performance of our share price in the last weeks. The accrued dividend is EUR 800,000,000 to be compared with the 700,000,000 that we were guiding the market towards. Finally, combined with the order ratio is confirmed also end of the year to stay above the 13%, which is the minimum target of our plan. Now leaving the floor to Jose.

Giuseppe Castagna, CEO, Banco BPM: Yes. Just some very brief, but I think very new final consideration about what happened in the last nine months that we live together. Let me try to drive you through what’s happening on the market to our stock and our shareholders after annual announcement, which I think was a pillar stone in old M and A fast that has been creating in Italy after our announcement on the public offer of Anima, which has been concluded successfully. As you may remember, I mentioned in the presentation on the business plan that of course the consensus needed always some months to acknowledge the result that we’re presenting year by year. The same happened, but more quickly this time.

As you can see, the first figure was the one related to the ANIMA to our consensus of net profit before immediately after annual announcement. This was the figure 1,300,000,000 of net profit for 2027. This was let’s call it the undisturbed figure of which was considered. But immediately after, after the presentation of our business plan, first part of 2024, February 2024, the consensus grew to 1,600,000,000.0. After Q1 results, again, grew to 1,800,000,000.0 and currently is already 1,900,000,000.0.

So of course, this helped a lot the performance, the share price of our stock which grew 70% during the same period more than the FTSE Italian banks which grew 40. But more important, this gave a material impact to our return total shareholder return for our shareholders, which in the last nine months was 91% compared to the lower of our peers. This for us is very important because of course we still have some room. We still have 10% between the consensus and our target which is €2,150,000,000 and we really believe that this can still add some move to our stock price and to remuneration for our shareholders. Let me conclude with a final page which is more qualitative but is very important because in only six months basically, we have already put the base for having the bank that we presented in our business plan.

We say that we would have wanted to have a bank well balanced between NII and non NII, A bank which would have overcome 17% in term 16% in term of ROE, we are already at 17%. 21% of ROT target and we are already at 22.6%. Net income six months net income of $1,750,000 we are at $1,600,000 But the qualitative part is very important for us which brings our bank to transform to be transformed from a pure commercial bank to a more capital light model of bank. You can see that the wealth and asset management plus protection grew from 24% of last year to 35% of this first half year, which is completely already in line with the results that we presented for 2027. Specialty banking solution, 9% vis a vis 10% to 15% of the planned target.

Commercial banking activities reducing from 65% to 56% of this first part of the year compared to with a 50%, 55% of our target plan. This means that we are already really on the right pattern for transforming our bank in a less capital intensive, in a less risky kind of bank. We think that this should bring to some consideration also in terms of multiple to be considered for the net result of our bank. And we are really very proud that only in six months we’re already able to give you this very strong pattern for the future of our bank. Of course, again, we still have a lot to do in terms of completion of the productivity of our product factory.

But all these things has been done very recently in the last couple of year and we could start only in the final part of 2024 to really manage some of the new joint venture we did. And we are really sure that this number can only improve once all the product factory will be at full stream. So thank you very much for your attention. We will give you some time for the Q and A section. And of course, happy to answer.

Conference Operator, Chorus Call: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer First question is from Giovanni Razzoli, Deutsche Bank.

Giovanni Razzoli, Analyst, Deutsche Bank: Two questions on my side. The first one is on the CET1 ratio. You mentioned that over the by 2027, you expected to release 140 basis points of CET1 via DTA and fair value on other comprehensive income. I was wondering whether there are other managerial actions that you can activate in order to improve further your CET1 ratio from the already, in my view, strong level of 13.3%. And then a clarification again on the CET1 ratio you reported in the second quarter because you said that you have accrued EUR 800,000,000.0 of dividends, but you plan to distribute €700,000,000 So shall I interpret this as kind of €100,000,000 of capital buffer so that your CET1 ratio would be around 15 basis points higher in the second quarter when compared to the 13.3% that you have reported?

And then final, to conclude on the CET1 ratio, if I put all this into the context, I would assume that your CET1 ratio would be closer to 14% rather than above 13%. So what are the other moving parts that may instead bring it just above 13% and not 14%? And the last question, the NII. You’re replicating portfolio as a duration that is more or less half the amount of your competitors. Two of them report a duration that is above four year.

Yours is flat at two point seven years. I was wondering whether you can increase or your target to increase the duration of your replicating portfolio to improve the contribution to NII as other peers are doing Or you don’t want to stretch your balance sheet in this respect and you don’t plan any changes?

Eduardo Ginebra, CFO, Banco BPM: Okay. So thanks a lot, Giovanni, for the two questions plus two questions. Let me start with capital. We continue to be very active on various fronts for improving our capital position. So thanks for noting the point on the DTAs and February comprehensive income.

Other managerial actions, we have already implemented two synthetic securitizations in the first quarter of this year. And we are making room for implementing a third one potentially in the fourth quarter. We are leaving a little bit on the background optimizations on the composition of our group, especially as far as assets that are currently generating goodwill in Anima who could be transferred from Anima to Banco BPMvita originating treatment directly at Danish Compromise. This is an option we are leaving for the future, but not something that we are currently actively pursuing in the current context. The accrued dividend as opposed to the 700,000,000, we are using only simply the criteria that we are smoothing the overall payment of the dividend between the first and the second the second part.

So the interim and the final balance. So this means correctly that we are prudent in capital calculation in this quarter, and we will release the same capital when we pay the second installment at the end of the year. Moving parts of capital, we’re happy to be above 13%, but we have to bear in mind that there could be risks from interest rate environment that may generate, so to say, that will require us to be well equipped whenever any evolution in interest rates may materialize. So for the time being, we are confident that we can we are very good at the current level of 17.3%. Let’s see what will happen in the future.

On the duration of the replicating portfolio, on one hand, we are happy that this is limited. We are not locked with this replicating portfolio for a very long period of time. Still we are generating satisfactory return on it now in area of positive carry after the reduction, the recent reduction in Euribor. Increased duration may have some price because, of course, there is some yield pickup given the current shape of the curve. At the same time, it may create some unnecessary rigidities in the overall assets and liability management.

So we will continue to replace the maturities that we have in the replicating portfolio on the increasing the duration unless there are, how to say, material changes in the shape of the curve, I don’t believe this is a choice we will adopt.

Giuseppe Castagna, CEO, Banco BPM: If may I add just a note on what you envisaged the potential 14%. We were said that after the animal, we would have been down to below twelve percent, we showed with the Q1 that we’re already on track for twenty percent. We were obliged to change our guidance of the original plan before the non approval of Danish Compromise from 14% target or ending part to 13. As you see in a couple of quarters, we are already above 13%. 13.3% is a very good results.

And with all the moving parts, which are going to increase as we have already done since seven, eight years, we were very able to manage our capital structure to improve our capital base also in the old time of the NPE disposal. And we will never work short of capital. We are a bank which can produce capital. And we very soon will be ready maybe to change our guidance also on the business plan.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Conference Operator, Chorus Call: Next question is from Antonio Reale, Bank of America.

Antonio Reale, Analyst, Bank of America: Hi, good afternoon. It’s Antonio from Bank of America. I have two questions, please, one on strategy and one on the effects of Golden Power, please. So starting with strategy, I think you’ve made your stand alone case clear, I think you’re well on track, if not ahead, when I look at your planned targets, which is why I’d like to ask you, what’s next for the bank. I mean, your other passivity rules now, you’ve been open to explore opportunities.

I

Andrea Lizzi, Analyst, Equita: think you

Antonio Reale, Analyst, Bank of America: won a stake in Montepasqui, and you’ve been open to explore further commercial partnerships. At the same time, your main shareholder, Credit Agricole, has rounded up its stake in the bank. So my question is where do you see Banco BPM going from here? And what role do you want to play in this Italian M and A wave? And the second question is on Golden Power, which is partly linked with my previous question.

I mean the conditions imposed by the Italian government on Uniquite have meant that there was a cap to the value your shareholders could extract from a potential improvement of the offer. Now I’m conscious we are talking about a purely theoretical exercise as UniCredit has never improved the offer and the bid remained below your share price throughout the offer period. So we never got to see the true value potential, but the theoretical upside value of the bank could have been capped somehow by Golden Power, which I mean is a serious matter, it creates a precedent, and I’m sure your Board and you as a management team have considered that. So how should we think about this in the future? Is it going to prevent or limit future M and A opportunities for the bank?

And more importantly, any value creation for your shareholders? I’d like to hear your thoughts. Thank you.

Giuseppe Castagna, CEO, Banco BPM: Let’s start from the first part. I think I was quite open in saying that we have we will wait to see under after the round one of consolidation what will be the situation. Of course, as you were rightly saying, we have already two things that are quite, let’s say something that can show the way. One is our participation in Monte Bascome 9%. And of course, you cannot forget that as well as for ANIMA offer, also our participation in Monte Basque was before all the OPS round, first round.

So we will see what happened to Monte Basque after the conclusion of Mediobanca transaction. Second, in the meantime, to the offer from UniCredit Agricole had the opportunity to grow and to from 9.9 to 19.9. We read yesterday that as they were announcing they are now 20 plus. So we will see what as a shareholder they will ask or today will want to do and we will examine full independence the best for our shareholders. And this come to the second question.

Frankly speaking, I never saw Golden Power as a limit for our shareholders. This was announced as a $10,000,000,000 M and A when it started. Now we have a bank that is already almost $17,000,000,000 worth. So, no limit for our bank, no limit standalone, no limit for further consolidation. I cannot do anything if somebody was stopped by the fear of a golden power.

But it’s not the question that you have to do to myself. I think that we have been able to bring the bank to the good world. As I mentioned before, we still have a couple of 100,000,000 to recover in order to have the value of the bank until the next update of the plan. And also the capital generation is proving that maybe we can have some more for our shareholders. So I don’t think really that the golden power can impact.

And in any case, it’s not something that we can decide. So what to say? In Germany, it’s not golden power. Spain is not golden power. In Portugal, it’s not golden power, but it’s something else with which the bank has to work with.

So I think it’s the new normal.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Conference Operator, Chorus Call: Next question is from Noemi Peruk, Mediobanca.

Noemi Peruk, Analyst, Mediobanca: Good evening. Thank you for taking my questions. I have two. The first one is on your target. So you have reported €1,200,000,000 of net profit as of H1, and your target is at €1,950,000,000 So this implies clearly a lower run rate going forward, even excluding one offs.

So I was wondering on which lines do you feel you have been particularly conservative? And my second question is on SRT. You have been pretty active in this market, especially in Q1 this year after the denial of the Danish Compromise Squared. So I was wondering if you saw part of it as nonrecurring. So I.

E, if you’re not going to roll over part of it in the future? And if so, how much it is in terms of basis points?

Giuseppe Castagna, CEO, Banco BPM: Okay. Let me handle, Naomi, the first part of the first question, then I will give to Eduardo for the second question. No, it’s not that we are conservative. I would say I think we are assuming the same pace of growth of the second half as well as the other bank who preceded us in the announcement of the results. Of course, first part of the year is always the best one.

We had also many one off. We gave our guidance before. We don’t think that just in one quarter, we can change our guidance. Of course, as Eduardo was saying, there are some indication for the opportunities that we have. The most important, I would say, do not depend really on us.

We have already considered another cut to 175 Euribor, let’s say starting from the end of Q3. If this won’t happen, we can have a better NII. For commission, I think the growth that we experienced is massive and we are replicating the same growth of Q2 over Q3 and Q4, which normally are much harder because of August and December. Cost of risk still have possibly some room, but we cannot avoid to think the geopolitical assumption that are now still present in Europe. So, of course, there is a degree of prudence, but there is a lot of commitment also in some other line like commission.

So we are trying to make something quite comfortable for the market to believe in. Of course, if there will be some progress in Q3, we will communicate and our expectation is already to always to beat the guidance. It’s not a target, it’s a guidance. Eduardo, do you want to

Eduardo Ginebra, CFO, Banco BPM: No, no. Just wanted to stress a little bit more the concept of the seasonality. So it’s not that the pace in the second half of the year is then the best estimator for the pace of the following years until the end of the plan. There are some areas of the P and L where in the first half of the year, you produce a The commission is the most important example.

But for example, also in trading, we account for the dividend of NPS, which is EUR 100,000,000 almost net. And this is something that happens once a year. According to the plan of the bank, this is confirmed for the years to come or even has some potential to improve. On SRT, sorry. The the question on SRT, so as you said correctly, we are very active.

I believe that in our roster of banks, we are the most active in Italy in this instrument. And we are comparable also with the larger international players. So we have printed two deals in March. We are planning a new one, as I said, answering to previous question in the fourth quarter. And the pace for us will be always to at least replace the amortizing deals with the new ones so that we preserve the capital optimization lever in the area where it is.

Of course, assuming that the conditions in the market in terms of cost of equity do not worsen from significantly from the current level. We are in a comfortable single digit area in terms of cost of capital. When we close these deals, we’ve been always in that area in the last two years or so. And we observe that the market seems continues to be seem conducive for similar condition to be replicated in the near future.

Conference Operator, Chorus Call: Thank you. Next question is from Ignacio Ulargui, BNP Paribas Exane.

Ignacio Ulargui, Analyst, BNP Paribas Exane: Thanks very much for the presentation. I have two questions. The first one is looking to blending growth. I mean how do you see the evolution of the loan book into the second half? Is that a very strong first half probably a bit overshadowed by financial institutions.

How should we think about that? And what would be the impact of that in our value add growth, if there is any color that you can share with us? And the second question, it’s on the commercial spread. I mean, leaving aside the incremental cut that you are forecasting, I mean, we take the current level as the kind of the right one to think about your commercial spread? Or do you still see incremental downside

Antonio Reale, Analyst, Bank of America: from here? Thank you.

Giuseppe Castagna, CEO, Banco BPM: Thank you. For long road, we think we have done a very good progress in the first part of the year, not only in the volume, but also in the quality. As I mentioned before, we have increased mortgages. We have increased guaranteed transactions. So, are very happy with this kind of model.

This of course may bring some one, two basis point less lower than normal, but you know that having guaranteed transaction is much better in terms of RoTE. Don’t see of course, what can I say after the consolidation, I think there will be maybe a bit less competition? We are ready to take advantage from that. We are luckily enough master of our decisions. So, we can still continue to serve very well our client, our places.

We know very well our client. I have to say that the successful conclusion of this potential M and A has been very much willing, wanted by our client. And so everybody is much closer to the bank. I think we can only make advantage out of that. In terms of commercial spread, no, I don’t think there is any impact that we have already factorized the reduction of in terms of cost of deposit in our forecast.

But in terms of loans, of course, we don’t have any reduction, further reduction expectation because when interest rates are cut, you can make the spread a bit more aggressive. So both because we grew at a good volume in H1 and because we think we have already a backlog of good transaction to be already granted starting from September, we think we can have a good part of the year also in H2.

Ignacio Ulargui, Analyst, BNP Paribas Exane: Thank you very much.

Conference Operator, Chorus Call: Next question is from Hugo Cruz, KBW.

Hugo Cruz, Analyst, KBW: Hi, thank you for the time. Two questions. One on NII, can you explain why the NII grew Q on Q on an underlying basis? Was it volumes? Was it loan spreads?

Just to give a bit more color would be helpful. And second, you mentioned a few times updating the business plan targets. Do you have any date in mind to do that? Thank you.

Eduardo Ginebra, CFO, Banco BPM: Sorry, the second is to review the targets of the Yes. Business

Hugo Cruz, Analyst, KBW: Yes. When might

Eduardo Ginebra, CFO, Banco BPM: you I think no. No. No. We don’t have currently a plan. We don’t believe we don’t have in our program to review the targets of the plan.

The plan includes already ANIMA. So this is not in the radar currently. We are happy with our €2,150,000,000 and very much focused on pursuing it in the foreseeable future. As far as NII is concerned, yes, after the deducting one off, we have a gross of around 1%. This is due to the fact that we have reduced quarter on quarter our cost of funding leveraging on the decreasing trend in in the market reflected especially in the index the index deposits.

Volumes did not contribute significantly. Some repricing in positive effect of repricing in the bond portfolio. But overall, I mean, It’s been a stable environment where we were able to counterbalance the reduction in rates on loans, on index loans with ALM and with deposits.

Giuseppe Castagna, CEO, Banco BPM: If just I may add something on maybe I was guilty for giving you the idea of revising the business plan when I was talking about the common equity. I say that, of course, we were obliged to cut the lending point 14% of common equity to 13%. Now we’re at 13.3%. Let’s me say that we think that with our new business model, can save capital. We can very soon come back and maybe give some more guidance for the capital.

For the net profit, I don’t think we can move our target plan also because implicitly, we have already increased our target because you have to consider that in February, we were considering an Oriba at 2.25 and now it’s 1.75. And again, with more common negative one to be deployed rather than the 13% ratio that we indicated.

Hugo Cruz, Analyst, KBW: Very helpful. Thank you.

Conference Operator, Chorus Call: Next question is from Andrea Lizzi, Equita.

Andrea Lizzi, Analyst, Equita: Good evening. Thank you for taking my question. The first one is if you can provide us an update on the remaining stake in Anima of 10%. What would you do with this remaining stake? The second question is on the net flows of AUM that were quite strong in the first half of the year.

Obviously, the market environment was supportive and this supported as well the growth in fees. Which actions do you mind to take in play to put in place to make this trend sustainable over time so to also sustain the growth of fees?

Giuseppe Castagna, CEO, Banco BPM: Thank you, Lizzie. Let’s say that for the 10%, me allow me to be a bit conservative in saying that, of course, this is a listed company. We will not announce anything other than say that we will consider all the option and we got free, let’s say, of the standalone practice only a few days ago. We have to consider the integration of Anmem who can be more vocal maybe the next time we will see each other, I mean the Q3. For the other, of course, this is the net flow.

So the market doesn’t account for the growth of €1,300,000,000 If you were meaning the market condition for sure, this helped. But also last year, we have a very good market condition because meanwhile interest rate go down is a good opportunity to invest in asset under manager. We have been very much focusing on this. We are one of the bank which has the lower contribution related to the total deposit base in assets under management. So this is something that we have to work very hard.

We are starting to see some good results, but still I think the best is yet to come because we have a lot of deposit growing quarter by quarter. And of course, a good part of it can be switched into market assets under management.

Andrea Lizzi, Analyst, Equita: Thank you.

Conference Operator, Chorus Call: Mr. Riscassi, there are no more questions registered at this time.

Giuseppe Castagna, CEO, Banco BPM: Okay. So thank you. It’s time to have some holiday for everybody. So tomorrow, we will have some more one to one or too many. Very happy to answer to your further question.

And if we don’t see each other, have a good holidays and see you in September. Bye bye. Thank you.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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