By Andrea Mandala and Valentina Za
MILAN -Italy’s Banca Popolare di Sondrio on Wednesday surprised investors by pledging to grow its net profit by a fifth by 2025 and pay out 55O million euros ($576 million) in dividends.
Shares in the Italian regional bank rose as much as 4% after it presented a new four-year plan, setting a net profit target of 323 million euros in 2025 up from 269 million euros last year.
Broker Jefferies welcomed as “positive” a rise in the payout ratio to 50% from 34% last year and said the 2025 targets in terms of return on equity and net profit were “well above consensus numbers.”
Widely seen as an attractive acquisition target thanks to a tradition of sound management and its roots in the wealthy northern Lombardy region, Popolare di Sondrio in December lost the cooperative status that shielded it from potential takeovers.
After failing in court to stop a government reform of large cooperative lenders, Popolare di Sondrio had to ditch a governance set-up that gave shareholders one vote each regardless of the size of their stakes.
However, CEO Mario Alberto Pedranzini said the bank continued to believe in a standalone future.
Speaking to journalists he deflected questions about whether Popolare di Sondrio could envisage a growth strategy involving shareholder UnipolSAI, an Italian insurer which is also the main shareholder in rival bank BPER.
“Our history shows our desire to grow independently. The plan is standalone, though we will evaluate all options that allow Popolare di Sondrio to express its value,” he said.
Pedranzini said there was nothing ongoing in terms of M&A.
Last week UnipolSai Chairman Carlo Cimbri also ruled out or now a tie-up between BPER and Popolare di Sondrio.
The Popolare di Sondrio CEO said the plan was “ambitious” but without “any particular execution risk” given it did not include disposals or other extraordinary moves.
Revenues from asset management and insurance are projected to rise 11% a year on average, while the net interest income is seen up 6% annually.
Popolare di Sondrio said it had 350 million euros of excess capital which it could use to cope with worsening economic conditions or for acquisitions.($1 = 0.9513 euros)