Published : 3 weeks ago, on 12/11/2024

MILAN (Reuters) – Italy’s Mediobanca missed revenue estimates and cut its full-year net interest income forecast on Tuesday, sending shares down more than 7% despite a better-than-expected quarterly profit.

For the current fiscal year, the bank now sees flat net interest income (NII) as it prioritizes growing total financial assets by attracting deposits, taking advantage of still-high, albeit declining, interest rates, while loan spreads are near lowest ever levels, CEO Alberto Nagel told a news conference.

In August the bank said it expected a low single-digit growth in full-year NII, the difference between interest earned and paid.

“We moved the interest income recovery forward. Today we forecast it flat for this fiscal year because we evidently prefer to wait for a recovery in loan spreads,” Nagel said.

The bank also sees a ‘flat’ NII also in the next financial year, it said in slides prepared ahead of an analysts’ presentation.

Mediobanca net profit fell 6.1 percent year-on-year to 330 million euros ($351 million) in the first quarter of a financial year which runs from July to June, above an analysts’ consensus of 319 million euros.

“Mediobanca net profit was 3% better than consensus, but the beat is mainly coming from lower tax, lower loan loss provisions”, Citi said in a research note adding that it expected “some initial weakness driven by lower core revenues”.

Revenue came in at 865 million euros, below a consensus provided by the bank of 884 million euros, despite a 29% increase in net fees to 231 million euros, thanks to the contribution of wealth management and corporate and investment banking (CIB). Also fees were below a consensus of 243 million euros.

Mediobanca sees a low double-digit growth in fees for the current year and the next one.

By 1010 GMT shares in Mediobanca fell 7.2% to 14.46 euros underperforming European banks stock index which lost 0.7%. Mediobanca shares gained 29% year-to-date.

For the current financial year, Mediobanca confirmed its forecast of earnings per share (EPS) growth of between 6% and 8% and a core capital ratio (CET1) between 15.5% and 16%. ($1 = 0.9401 euros)

(Reporting by Gianluca Semeraro, editing by Alvise Armellini/Keith Weir)