Mediobanca, headquartered in Italy, announced a first-half net profit that exceeded market expectations on Friday, buoyed by the benefits of rising interest rates on its lending income and a strategic pivot towards wealth management. According to Chief Executive Alberto Nagel during a press conference, the bank operates on a financial calendar from July to June. It is confidently progressing towards achieving the goals of its 2026 strategy unveiled last May.
Italy’s Mediobanca’s H1 Profits Surged Higher, Beating Estimates
Nagel emphasised the transformative nature of the recent performance, highlighting it as a manifestation of the group’s new strategic direction. “Our progress has been substantial and highly efficient in generating and utilising capital,” he remarked. This was underscored by the bank’s core capital ratio, which stood at 15.3% of risk-weighted assets, surpassing analysts’ forecasts from Citi.
The bank’s forward-looking strategy focuses on elevating its wealth management sector as the primary growth engine, concurrently scaling back the Corporate & Investment Banking (CIB) division’s engagement in capital-heavy activities.
This strategic adjustment has already yielded positive outcomes, with total financial assets (TFA) increasing by 5.5 billion euros to reach 94 billion euros during the first half of the fiscal year. In contrast, risk-weighted assets saw a 5% reduction.
Mediobanca reported a 10% increase in net profit year-over-year, reaching 611 million euros ($658 million), which was above the consensus of 596 million euros provided by analysts. Revenue also saw a rise of 4% to 1.73 billion euros, aligning closely with projections, driven by an 18% surge in net interest income (NII) to 997 million euros.
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Nagel projected a continued NII growth of around 10% for the current year, independent of interest rate fluctuations, with expectations of further growth in 2025 and 2026.
Despite an 11% drop in fees due to a downturn in the CIB sector, the wealth management segment’s strong performance didn’t fully counterbalance the decline. Nonetheless, Mediobanca noted a “significant reversal” in fee trends in the second quarter, bolstered by the contributions from Arma Partners, a London-based tech advisory firm acquired by Mediobanca last year.
In a move to share its success with shareholders, Mediobanca announced it would distribute its first interim dividend in May, targeting a cash payout ratio of 70%.
