29 Jan, 2025

Italy's biggest banks set to report higher profits for 2024

By FEDERICA TEDESCHI and Marissa Ramos


Italy's three largest banks — Intesa Sanpaolo SpA, UniCredit SpA and Banco BPM SpA — are expected to report higher year over year profits for 2024 in the coming days.

Banco BPM is projected to record the largest net income increase at 37.5%, from €1.20 billion to €1.65 billion, according to estimates data from Visible Alpha, part of S&P Global Market Intelligence. Intesa's net income is forecast to rise 14% from €7.72 billion to €8.80 billion, while UniCredit's net income is forecast to increase 10.1% from €8.19 billion to €9.02 billion.

BPER Banca SpA and Banca Monte dei Paschi di Siena SpA — the fourth and fifth largest banks in Italy — are expected to report slightly lower profits compared to 2023.

Revenue growth is anticipated at all five banks. Intesa and Banco BPM are set to have the highest net interest income (NII) increases, at 6.7% and 3.9%, respectively.

Noninterest income is projected to rise 8.5% and 9.9% for Banco BPM and Monte dei Paschi, respectively, while dropping 3.8% for BPER Banca.

The Italian banking sector's profitability will remain strong in 2025, though less robust than in 2024, due to lower NII, increased operating expenses from renewing banking labor contracts and higher digital investments, said Andrea Costanzo, vice president of European financial institutions at Morningstar DBRS.

Common equity Tier 1 ratio — a key measure of financial stability — should increase at all but UniCredit, which has handed back billions of euros to investors through dividends and share buybacks.

Stable asset quality

The asset quality of major Italian banks is projected to remain stable for 2024.

Banco BPM is expected to show the most significant improvement, with its ratio of nonperforming loans to gross loans decreasing to 3.35% in 2024 from 3.48% in 2023. UniCredit's ratio is projected to increase to 2.83% in 2024 from 2.66% in 2023.

"Neither COVID nor the rise in the cost of borrowing have triggered an asset-quality cycle in recent years," Scope Ratings said in a Jan. 21 report, "In fact, banks in the EU periphery continued to clean up their balance sheets, particularly in Italy and Greece."

Consolidation in focus

Consolidation among Italian banks will likely be a key theme on earnings calls following the surge in M&A activity that began in late 2024.

In November 2024, UniCredit offered to acquire Banco BPM SpA for €10.10 billion, shortly after Banco BPM itself proposed to take over asset manager Anima Holding SpA, and both bought into Monte dei Paschi as the Italian government reduced its stake.

Earlier this year, smaller specialty lender Banca IFIS SpA made a €294.7 million offer for domestic peer illimity Bank SpA. Most recently, Monte Dei Paschi launched a €13.30 billion bid to acquire Mediobanca Banca di Credito Finanziario SpA, marking what would be the largest Italian bank deal of the decade.

Lenders are seeking to diversify and increase noninterest income, particularly through wealth management, according to a Jan. 15 S&P Global Ratings sector outlook report.

Intesa will be the first big Italian bank to report earnings on Feb. 4.