BMPS Q3 profit stays stable, revenue decline offset by cost cuts

Banca Monte dei Paschi saw its third quarter pre-provision profit remain largely stable at €248 million, helped largely by the bank cutting operating costs.

Italian banks
Source: Bloomberg

Banca Monte dei Paschi di Siena (BPMS) (BIT:BMPS) saw its third quarter (Q3) pre-provision profit remain fairly stable at €248 million, falling just 1% against the previous quarter, with the bank posting Q3 net profit of €91 million.

The relatively stable performance from the bank comes after it has implemented cost-cutting measures that include reducing its head count and the lowering of its overall operating costs by 3.5% in the three months to September.

The move has helped to keep profits stable and offset weaker revenues, with the Italian lender seeing its turnover fall by 2.7 percent due to the bank struggling to sell its range of investment products.

Meanwhile, the lender saw a 0.5% rise in client loans driven by home mortgages in the quarter.

Uncertain future for Italian lenders

The banking environment in Italy remains rocky, with billions of bad loans left on lenders balance sheets.

On Friday, Italy’s central bank announced that defaulted loans have fallen by 22.7% compared with last year, with decline primarily driven by securitisation deals.

Last week, Italian regional bank Popolare del Lazio announced that it has shifted €120.5 million of bad loans to a to a securitisation vehicle known as POP NPLs 2018.

Early last year, the total amount of defaulted loans on Italians banks’ balance sheets stood around €200 billion but has since fallen to around €122.5 billion – their lowest level in six years, according to its central bank.

BMPS sold around €24 billion in bad loans earlier this year, with the bank looking to offload a further €3.3 billion in a move that will help improve its capital buffers and strengthen its position and that of the wider Italian banking sector.

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