Italy's BPER updates outlook as it prepares for further M&A growth

By Andrea Mandala

MILAN, Aug 6 (Reuters) - Italy's BPER Banca on Thursday updated its outlook, setting a 2028 profit target of around €2.7 billion ($3.1 billion) following last year's takeover of smaller peer Popolare di Sondrio, while it stands ready to grow further as the sector consolidates.

BPER, Italy's fifth-largest bank, is set to be a key beneficiary of Intesa Sanpaolo's €35-billion bid for Monte dei Paschi di Siena (MPS).

If its bid succeeds, Intesa will sell 635 MPS branches, as well as most of the Siena-based lender's central operations and the historic Monte dei Paschi brand to BPER's largest shareholder Unipol for them to be merged into BPER.

Unipol, which sells its insurance products through bank branches, has supported BPER's growth through acquisitions in recent years.

The MPS deal would turn BPER into Italy's second-largest banking group by customer loans, direct funding and number of branches, strengthening its position in the Lombardy, Tuscany and Veneto regions.

Speaking to analysts, CEO Franco Papa described the transaction as strategically attractive for the bank, although adding it was still too early to estimate its impact because details of the branch package remained unclear.

"We don't know where these branches are rightly located," he said.

"It is very difficult to assess the numbers beyond what we know so far," he added.

Before buying Popolare di Sondrio in 2025, BPER had acquired Carige in 2022 and some 600 branches in 2020 when Intesa Sanpaolo took over smaller rival UBI.

"We have demonstrated our ability to manage disruption and transform it into an opportunity for sustainable growth, and have built an organisation that is now ready for future challenges," Papa said in a statement.

BPER introduced new medium-term targets, including a cumulative shareholder payout of around €7.5 billion for 2025-2028, or at least 85% of profits, planned cash dividends and share buybacks.

Under its previous 2025-2027 business plan, unveiled in October 2024 and based on the bank's profile at the time, BPER had committed to cumulative shareholder distribution of €3.2 billion.

Papa said BPER's strong capital position provided flexibility to consider higher shareholder returns than those currently envisaged in the plan if conditions allow.

He added that the bank's share buyback programme, already authorised by the European Central Bank for up to €750 million, would start immediately after the summer.  

Betting on corporate banking, wealth management and 'bancassurance' activities, BPER said it would grow revenues to around €8 billion by 2028, from roughly €7.4 billion in 2025, with net fees increasing by around €400 million over the period to account for 38% of revenues.

Separately, BPER reported on Thursday a first-half ordinary net profit of €1.33 billion, up 14.7% year-on-year on a restated basis.

($1 = 0.8666 euros)

(Reporting by Andrea Mandalà, editing by Alvise Armellini and Valentina Za)