Commentary

Large Italian Banks: Strong 2024 Results Are Helping M&A to Succeed in a Lower Interest Rate Environment

Banking Organizations

Summary

The commentary analyses the FY 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 Monte dei Paschi di Siena S.p.A.

Summary highlights from the commentary include:

-- Italian banks reported an aggregate net profit of EUR 4.3 billion in Q4 2024, down 31% YOY (down 9% YOY excluding one-offs). For FY 2024, aggregate net profit totalled EUR 23.7 billion, up 7% YOY (up 8% YOY excluding one-offs).
-- NII resilience coupled with supportive net fees and cost discipline underpinned operating profits in 2024.
-- Loan loss provisions were down on a YOY basis and so was the cost of risk as asset quality risks remain contained.
-- Liquidity has been good despite reduced reliance on central bank funding.

"Despite the slowdown in the last quarter, 2024 marked another record-high year for Italian banks", said Andrea Costanzo, Vice President, European Financial Institution Ratings. "Stronger risk profiles and sustained capital accumulation have fostered merger and acquisition activity in recent times as Italian banks seek to improve their competitiveness in Europe and to ensure they can succeed in a lower interest rate environment by creating synergies and scale".