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The group posted a good set of results, driven by the strong consumer and wealth management divisions, a resilient CIB business, and a normalised contribution from associates.
Companies: Mediobanca Group (MB:BIT)Mediobanca S.p.A. (MB:MIL)
The war between MB’s management and Mr Del Vecchio over the future of Generali’s CEO and strategy has intensified ahead of MB’s AGM due on 28 October. We are not in a position to place a bet on the future winner. We can only say that, in our view, a victory by Mr Del Vecchio and his allies would be detrimental to both Generali and MB’s short-term share price performance. And, unfortunately, MB’s relatively stretched valuation leaves little room for disappointment.
The group managed to post stable quarterly profits thanks to its Principal Investing division. Management foresees ongoing profit progression this year and reiterated its financial objectives for the following year.
The group posted a strong set of results driven by robust activity levels in CIB and wealth management, cost control and benign asset quality trends. The confirmed recovery of the consumer banking division should become visible in the first quarter.
The group posted a strong set of results driven by another strong CIB performance and ongoing wealth management momentum which more than offset a temporarily depressed, consumer finance business. In this context, management is eager to return capital aggressively as soon as it is allowed.
Companies: Mediobanca S.p.A.
The group’s business model has proven resilient to lockdowns. In that context, management confirmed its willingness to return capital to shareholders on an accelerated basis by accruing 70% of the results.
Del Vecchio’s entry has attracted lots of attention. In our view, it only reinstates the situation that was prevailing when MB was protected by a shareholding pact and had no plan to divest its stake in Generali. This is not good news, but this does not deserve a valuation discount either.
Management showed strong confidence in the fact that the COVID-19 impact on the group will be limited and short-lived, thus creating opportunities to gain market shares against more affected incumbents. Such a confidence is perfectly illustrated by the group’s willingness to apply for a new share buy-back programme.
Second-quarter saw ongoing top-line expansion driven by record activity levels and continued investment in distribution by adding new staff and branches/agencies.
The new business plan stands at the high end of consensus expectations. The top-line growth will come at a high cost in terms of operating expenses, translating into relatively similar bottom-line progression. It remains that, if successful, the shareholders will be granted a 10% total return, above the 8% they usually require for an equity investment.
The group’s strong set of results was largely attributable to non-recurring items. The underlying operating performance was largely in line with expectations. The group will present its new business plan on 12 November. It will have to be seen if it suits Mr Del Vecchio, notably as regards the evolution of the group’s stake in Generali.
The group managed to mitigate the lack of equity market deals through strong speciality finance revenues. The capital release story was perfectly illustrated by the validation of CheBanka!’s internal models.
The fourth quarter results proved to be resilient. The validation of CheBanca!’s mortgage internal model reminds that Mediobanca is also a capital release story based on the RWA optimisation potential. The valuation impact of the extension of the Danish Compromise option is more debatable.
The quarterly results were in line with expectations. Although the evolution of the mix of assets under management confirmed mounting risk aversion, the group did not experience any outflows, while its capital position proved immune to the sovereign spreads’ widening. It remains that an Italy-exit would translate into redomination losses and liquidity stress, explaining why the stock has been treated like its domestic peers.
Bolloré’s exit will automatically end the shareholders’ pact that has protected the group for 20 years. The successful transformation of Mediobanca into a promising financial conglomerate makes it a choice prey but it is too early to conclude that the group’s capital is no longer locked.
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