Italian Banks: H1 Suggests Good Momentum To Continue in 2024

The commentary analyses the H1 2024 results for the five major Italian banks: Intesa Sanpaolo S.p.A., UniCredit S.p.A., Banco BPM S.p.A., BPER Banca S.p.A., and Banca MPS S.p.A..

Summary highlights from the commentary include:

-- Italian banks reported an aggregate net profit of EUR 6.6 billion in Q2 2024, up 15% YOY (up 10% YOY excluding one-off items). For H1 2024, aggregate net profit totalled EUR 12.6 billion, up 20% YOY (up 16% YOY).
-- Higher net interest income and net fees have supported revenues while cost discipline helped offset inflationary pressures, the impact from the renewal of the banking labour contract, IT investments, and restructuring charges.
-- Loan loss provisions were down YOY in Q2 and in H1, and the cost of risk is on a downward trend. Asset quality metrics have remained stable despite sluggish loan growth.
-- Capitalisation strengthened in the quarter despite higher distributions to shareholders. Funding and liquidity remains sound.

"H1 suggests good momentum to continue in 2024 with resilient net interest margins, a good contribution from fee income, and lower credit costs offsetting the likely increases in cost bases mainly resulting from higher personnel expenses and digital investments," said Andrea Costanzo, Vice President from the Morningstar DBRS European Financial Institution Ratings team. "At this stage, we expect 2024 to shape up as good as or better than 2023 should asset quality trends not deviate materially from the current trajectory".