November 6, 2019 / 7:55 PM / 6 days ago

Italy's Banco BPM eyes first dividend payout next year

MILANO (Reuters) - Italy’s third biggest lender Banco BPM (BAMI.MI) is on track to pay out its first dividend since it was created in 2017, its chief executive said on Wednesday.

FILE PHOTO: A woman walks past Banca Popolare di Milano ( BPM) downtown Milan, Italy, February 11, 2016. REUTERS/Stefano Rellandini

The bank, born from the merger of Banca Popolare di Milano and Banco Popolare, refrained from paying dividends in the first two years of its existence as it focused on bolstering its financial strength and cleaning up its balance sheet.

Like other mid-sized retail lenders, Banco BPM is struggling to generate profits from its core business, something expected to drive a possible wave of mergers between second-tier banks to cut costs.

“We are on track for a possible dividend distribution on 2019 (results),” CEO Giuseppe Castagna told analysts on a conference call.

Highlighting the challenges it faces, the bank posted a fall in third quarter net profit on Wednesday, with lower interest income and core revenues, but still beat estimates from eight analysts polled by Reuters. However, for the first nine months of the year, the bank reported a 31% increase in net profit.

It also confirmed media reports that it will postpone the presentation of its new business plan, initially scheduled for late 2019, to the first quarter of next year.

Net profit for the three months through September fell to 93.3 million euros from 172 million euros a year earlier, when earnings were boosted by capital gains from an asset sale. The analysts surveyed by Reuters expected an average net profit of 81 million euros.

Net interest income, a measure of how much money a bank makes from its core retail business — stood at 500 million euros, down some 10% from a year earlier.

Banco BPM’s Common Equity Tier 1 ratio, a key measure of financial strength, was 12.1% on a fully loaded basis at the end of September, broadly unchanged from the end of June.

The bank said it would focus on its core business in the last quarter of the year, paying close attention to costs with revenue trends expected to remain broadly unchanged barring any market turbulence.

Reporting by Andrea Mandala; editing by James Mackenzie and Kirsten Donovan

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