Banco Bpm brings up 2019, new plan is approaching. Cold analysts on UBI option

Banco Bpm working on the new business plan, which could be presented in the first quarter of 2020. The latest press rumors see the new strategy of the group led by Giuseppe Castagna to leverage above all on the commercial relaunch of the bank through an improvement in productivity indicators. After years spent in the derisking process, the focus should shift from asset quality and capital strengthening issues to core management.
"The next business plan of Banco Bpm – explain Mediobanca analysts – will focus on cost reduction and on the improvement of asset management within its network, while at the same time continuing to reduce the NPE in an organic and inorganic way ".

Need hard core of members as done by UBI

The printed paper adds that Banco Bpm would like create core of historical partners that could stabilize the group's governance and partially balance the weight of the funds. Something similar to what happened in Ubi Banca where entrepreneurs and foundations of the territory were able to armor over 20% of the capital. An idea that "seems rather demanding" for Mediobanca analysts who have a Neutral rating on Banco Bpm with a target price set at 2 euros. Even the hypothesis of an extraordinary operation, according to rumors, seems remote for now. In the last month of September it has returned to circulation the idea of ​​integration with Ubi Banca, also at work on the new business plan, but for the moment the road appears to be on the rise especially due to some governance issues. On any M&A transactions, Mediobanca remains cautious "given the strong focus still on asset quality and the strengthening of capital ratios as required by regulatory authority, particularly in large banking players".

Third quarter accounts are coming and the title continues to run

On November 6, after the markets close, Banca Bpm will lift the veil on the accounts for the third quarter of 2019. According to estimates by Mediobanca Securities, the banking group could announce a net profit of 98 million euros, down 78% compared to the 443 million recorded at 30 June 2019 and 43% less compared to the same period last year when it recorded profits of 172 million.
Among Bloomberg analysts, 7 advise buying the stock, 9 are neutral and no one recommends selling. The average target price would be 2.28 euros, which implies a potential return of 6.5% compared to current prices.
In Piazza Affari the Banco Bpm title continues to run. In the last 4 sessions it has gained over 5%, returning close to the annual maximum at 2.168 euros touched last month. To drive the actions of the Lombard bank a series of rumors including the possible sale of the consumer credit company, Profamily, valued at around 100 million euros. In general, the stock saw a turnaround in September with rumors about a future merger with Ubi Banca. Until a month ago the stock was the worst of all the Ftse Mib with a largely negative balance. From the lows of August 14th, the stock rallied by + 32%.
Now the situation on the stock exchange has changed. Despite the strong recovery in the last period (+ 32% from mid-August lows) in the wake of the relaunch of the M&A hypotheses, Banco Bpm is still among the most short of the entire list. Today's update of the PNCs (Posizioni Nette Corte) of Consob sees 6 short open positions with a percentage of 4.52%.

Focus on sale of Profamily

Banco Bpm is also focusing on the sale of Profamily's no-captive business, for which they would be coming binding offers by the end of the month. Please note that the captive part of Profamily was sold to Ducato in the second quarter of this year. The consumer credit division, created in 2010 and inherited from BPM, would be targeted by some private equity funds, including Apollo, Atlas, Alchemy, Chenavari and Christofferson, Robb & Co and binding offers are expected by the end of October.
"Banco Bpm said during the second quarter conference call that started the sales process for Profamily (which has € 1.3 billion in loans), which, according to the bank, could lead to a reduction of € 1 billion of RWA (Risk-weighted Assets), equal to +20 basis points of the CET1 ratio, with a negligible impact on EPS ”, Mediobanca analysts stress, who estimate a“ CET1 at 12.3% in 2019, which could increase up to 12.5% ​​after the sale of Profamily ”.