Italy’s Banco BPM to take insurance in-house in new profit plan

Written by on November 5, 2021

November 5, 2021

By Andrea Mandala and Valentina Za

MILAN (Reuters) -Italy’s Banco BPM said on Friday it planned to acquire full ownership of its insurance partnerships as part of a new multi-year plan that aims to achieve net profit of more than 1 billion euros ($1.2 billion) in 2024.

Banco BPM has insurance joint-ventures with Italy’s Cattolica, which was recently acquired by Generali, and Britain’s Aviva.

The Italian bank is taking its lead from Intesa Sanpaolo, which has weathered a tough environment of negative interest rates better than other banks thanks to its wealth management and insurance businesses.

UBI, another mid-sized player like Banco BPM, had also planned to bring insurance in-house before receiving an unsolicited takeover bid from Intesa.

Banco BPM said it expected revenues to grow 2.4% annually on average over the 2021-2024 period, driven by a projected 6.3% increase in net fees from it asset management business and an 8% rise in revenue from its various partnerships.

It also runs a consumer finance business in tandem with France’s Credit Agricole, while it relies on Anima, of which it owns 19.4%, for asset management.

Net interest income, money earned from the gap between rates applied on loans and those paid on deposits, is forecast to stagnate over the period, Banco BPM said in a statement.

Banco BPM said it would invest 650 million euros, which on a yearly basis represents a 60% increase on 2020, in the digital transformation of its business, to get its customers to do more than 90% of their transactions online by 2024.

It had presented a previous business plan just as the pandemic hit early in 2020, plunging Italy into recession.

Since Intesa snapped up UBI to create a domestic champion, Banco BPM has tried to strike a merger but negotiations with rival BPER Banca have led nowhere.

With its roots in the wealthy Lombardy region, Banco BPM is widely seen as the perfect geographical fit for UniCredit, which is under pressure to boost its domestic footprint and catch up with Intesa, but last month walked away from the acquisition of state-owned Monte dei Paschi.

Banco BPM on Friday reported a third-quarter net profit of 110.7 million euros, well above a 78 million euro Reuters-compiled consensus.

($1 = 0.8651 euros)

(Reporting by Andrea Mandala and Valentina Za; Editing by Maria Pia Quaglia and Alexander Smith)

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