Mediobanca shares slide 8% following revenue miss, NII guidance lowered

By Gianluca Semeraro

MILAN (Reuters) -Italy’s Mediobanca missed revenue estimates and cut its full year net interest income forecast on Tuesday, sending shares down more than 8% 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 was expecting 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.

By 1315 GMT shares in Mediobanca dropped 8.2% to 14.29 euros, underperforming European banks stock index which lost 1%. Mediobanca shares have gained 27.7% year-to-date.

The sharp drop in Mediobanca shares “seems harsher” compared to the revenue miss, Citi analysts said in a note.

Share price reaction seems also driven by positioning and the historical over-delivery of Mediobanca, which was not visible this quarter in core profitability.

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, but it was above an analysts consensus provided by the bank of 319 million euros.

Revenue came in at 865 million euros, below the analyst consensus of 884 million euros, despite a 29% increase in net fees to 231 million euros, due to the contribution of wealth management and corporate and investment banking (CIB). Fees too were below the consensus of 243 million euros.

Mediobanca also sees a ‘flat’ NII in the next financial year and a low double-digit growth in fees in the current year and the next one, it said in slides prepared ahead of an analysts presentation.

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)