Banca Monte dei Paschi di Siena (MPS) has returned to a profit of €390 million after four consecutive years in the red. Preliminary results approved yesterday by the board of the bank marked a significant turnaround in the midst of another storm, pharm that of the stock market, with the stock yesterday losing another 7.9%.
Among the factors in play there is also the effect of the restatement of the Alexandria derivatives contract. Italian stock market regulator Consob specifically asked for it to be indicated in the bank’s accounts as a CDS derivative, effectively transferring to the income statement €500 million of contributions from the contract, until recently set aside as reserves. Without this one-off item, MPS would have closed 2015 with a loss of €110 million, including €130 million of costs required to take part in the rescue of Banca Marche, Banca Etruria, and Carife CariChieti. Net of these items, the bank would have in any case reached the waterline, with about €20 million of profits in one year. Among the 2015 figures, also net of the Alexandria transaction, the bank reported a pre provision profit of €1.87 billion, up 27% from 2014 supported by the bank’s core business, with an interest margin of €2.26 billion (up 5.4% year on year thanks to the repayment of the Monti bonds) and fees and commissions for €1.81 billion (up 6.6%). The lender continued to cut operating expenses (€2.63 billion, down 4.6%): “In the past four years, savings totalled approximately €800 million,” the bank said in a statement. And a few lines further down it also points out that in the same period the bank booked total impairment losses of €15.7 billion; €2 billion of these were booked last year. The stockpile of bad loans started, although lightly, to shrink: at the end of the year, non-performing loans dropped to €45.9 billion, or €600 million less than in September.
Excluding the sale of €1 billion of loans made in December, the quarterly change in the stock of gross impaired loans amounted to about €400 million (about €1.2 billion in the third quarter), the lowest level of the last eight quarters. The degree of coverage remains stable. During the year it also continued to clean its accounts. Net impairment losses amounted to €2 billion (down 11% on 2014). In terms of equity, the situation between September and December changed little: on January 1 MPS had a Cet 1 fully loaded ratio at 11.7%, well above the 10.2% target set by the European Central Bank. In addition to the accounts, eyes remain focused on potential consolidation, which currently sees UBI taking the role of partner, even more so after Banca Popolare di Milano pulled out of a possible complicated three-way tie-up.
Italy24