Large Italian Banks: Solid Q1 2025 Results Set the Foundation to Navigate M&A Shockwave Amidst Global Trade Tensions

The commentary analyses the Q1 2025 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 6.8 billion in Q1 2025, up 12% YOY (up 15% YOY excluding one-offs).

-- Strong fee and trading income coupled with cost control offset net interest income (NII) pressure.

-- Cost of risk (CoR) trends downward; however, asset quality risks have increased.

-- Funding and liquidity remain sound despite lower recourse to central banks.

"The net fee and commission income growth partly compensated for lower NII in Q1 2025. However, operating profit increased on the back of strong trading income and cost discipline, enabling banks to absorb a potential future increase in CoR if global trade tensions have significant repercussions for economic growth and unemployment," said Andrea Costanzo, Vice President, European Financial Institution Ratings. "The solid results in Q1 2025 set the foundation for banks to navigate the M&A shockwave and increased asset quality risks with more robust balance sheets".