Financial statements for six months ended 31/12/16 approved

Net profit up 30% to €418m, ROTE 10%

Revenues at all-time highs, up 6% to €1,072m

GOP  up 14% to €425m, 3Y CAGR   +27%

Cost of risk down 34 bps to 102 bps

Revenues and profits up in all business segments

CET1 up to 12.3%

  • In the six months ended on 31 December 2016, the MB Group delivered a 30% increase in net profit (from €321m to €418m) and a 14% increase in GOP (from €372m to €425m). This performance was driven by a combination of growing revenues, cost control and an ongoing reduction in the cost of risk in all business lines. The main income sources performed as follows:
    • Consolidated revenues were up 6%, at €1,072m, an all-time high for the Mediobanca Group. Net interest income rose by 5% to €636m, driven by substantial, 13% growth in consumer credit (to €408m), which now generates 65% of the Group total; and net fee and commission income was up 4% (to €237m), on a higher contribution from Wealth Management (up 43%, from €63m to €90m); with the consolidation of acquired companies Barclays and Cairn Capital, this division now generates approx. 40% of the Group’s fee income;
    • Costs were flat like-for-like, and rose from €420m to €464m solely as a result of the consolidation of the newly-acquired companies. The 7% reduction in costs at the Holding Functions division, along with the stability in CIB and WM, offset the 5% rise in costs in consumer credit due to the higher business volumes;
    • Loan loss provisions were down 18% (from €224m to €184m) and the cost of risk stood at 102 bps (down from 136 bps), in line with pre-crisis levels; the trend in asset quality was positive in all divisions, in particular in WB (where the cost of risk is now virtually zero) and consumer credit (cost of risk down from 351 bps to 286 bps); the coverage ratios improved, for NPLs (to 55%), bad debts (to 69%), and performing loans (to 1.1% for the Group, and to 2.5% for consumer credit); and the Texas ratio declined to 15%;
    • GOP net of cost of risk has risen by 14% in one year (from €372m to €425m) and by 27% in the last three years (CAGR), bearing out the positive trend in the Group’s results;
    • Net profit rose by 30% to €418m, including non-recurring items totalling €93m, which reflect:
      • €114m in gains on disposal/writedowns to AFS shares deriving chiefly from the sale of half the stake owned in Atlantia;
      • €50m as a one-off contribution of to the Single Resolution Fund;
      • €29m in net income booked following allocation of the badwill deriving from the Barclays acquisition (PPA);
    • MB Group ROTE( ) increased from 8% to 10%. All the divisions show an improvement in profits, with the sole exception of HF which reported a loss of €123m (€93m), due to higher holdings of liquid assets in a negative interest rate scenario:
      • CIB: net profit up 19% to €126m – ROAC  up from 9% to 11%
      • Consumer: net profit up 75% to €123m – ROAC up from 16% to 24%
      • Wealth Management: TFA up to €51bn (up 20% on end-June 2016), net profit doubled, from €24m to €49m (€22m of which PPA) – ROAC stable at 10%
      • Principal Investing: net profit up 5% to €242m – ROAC 15%
    • The Group’s capital solidity and low risk profile are reflected in the ECB’s decision to assign Mediobanca, for the second year running, a SREP capital ratio which was lower than the previous year. SREP 2016 was set at 7% for the CET1 ratio (phase-in) and at 10.5% for the total capital ratio. These levels rank Mediobanca among the best banks at European level, and are significantly lower than the capital ratios  actually reported by the Group at 31/12/16:
      • CET1: 12.3% phase-in, 12.8% fully-phased
      • Total capital: 15.7% phase-in, 16.4% fully-phased. 
    • Significant events that took place during the six months include the approval, on 16 November 2016, of the MB Group’s 2016-19 strategic guidelines, and announcement of the acquisition of 100% of Banca Esperia, which is functional to developing the new Wealth Management division.