May 7, 2020 / 11:15 AM / 19 days ago

Mediobanca sticks to targets despite crisis, eyes dividend

MILANO (Reuters) - Italy’s Mediobanca (MDBI.MI) on Thursday stuck to its targets through 2023 saying its diversified business model would allow it to weather the COVID-19 crisis, while its CEO expressed confidence the bank would pay a dividend later in the year.

FILE PHOTO: Italy's Mediobanca headquarters is seen in Milan, Italy, November 8, 2019. REUTERS/Flavio Lo Scalzo

The European Central Bank has told euro zone banks to halt dividend payments and share buybacks until at least October so they can better support economies affected by the coronavirus crisis.

Chief Executive Alberto Nagel said he expected the bank would be able to pay dividends after that date, provided the ECB allowed it.

“Given our capital position and since we have already accrued a dividend of 0.27 euros per share until end of December, we are confident we will be able to pay a dividend,” he told a press briefing.

Under a plan unveiled last year, Mediobanca targeted a dividend of 0.52 euros per share for the current fiscal year which ends in June. The bank normally pays dividends in November.

The bank’s board will issue a new dividend guidance in July that will be put to shareholders at the end of October.

For the three months to the end of March, the bank posted a net profit of 85 million euros ($92 million), down from 176 million a year ago but in line with an analyst consensus compiled by the bank.

“Mediobanca is strongly committed to the implementation of ... the plan, relying on its diversified business model and on the ability to grow across-cycles and turn the critical issues ... in opportunities to consolidate its positioning”, the bank said.

Revenues at the Milanese financial group, whose business spans investment banking to consumer credit, were down in the quarter mainly due to a trading loss driven by COVID-19.

“Our performance is solid because it is generated by core revenues. There was a slowdown due to the COVID-19 emergency which impacted mainly trading profits not core revenues”, Nagel said.

Mediobanca’s core capital ratio stood at 14% with a buffer of 600 basis points on its minimum regulatory requirement.

The bank sees a core capital ratio of around 15% in 2021 even if its cost of risk, a measure of writedowns booked on loans, were to double due to the coronavirus outbreak.

Reporting by Gianluca Semeraro, editing by Giulia Segreti, Kirsten Donovan

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