For the top five Italian groups, the third quarter closed with strong growth in revenues and profits. But loans continue to decline, unlike what happens in the rest of Europe, while commissions increase. Colombani: “We need credit supply policies aimed at stimulating investments for the transformation of production systems and consultancy models oriented towards the best interests of customers”
Revenues still record high in the third quarter of 2024 for the top five Italian banking groups, but credit marks a further setback. Despite the declining monetary policy rates and the contraction in lending (-2.1%), net interest marks a marked increase (+7%) compared to the same period last year. If we consider loans net of repurchase agreements with customers, which effectively represent loans to the real economy, to families and businesses, the reduction is -3.8% in one year (the figure does not include Bper, which does not provide information in this regard). This is what emerges from the analysis conducted by the Fiba Foundation of First Cisl.
The reduction of jobs
Loans have been in constant decline for nine consecutive quarters for a total of over 94 billion (-7.8%), while at a European level the significant banks in the same quarters, not considering the last one closed at the end of September, because not yet published by the ECB, show an overall increase of 3%. Net commissions give even more strength to revenue growth with an increase of 7% and an amount equal to 1% (on an annual basis) of total assets. In this respect, the trend is confirmed in which Italian banks perform much better than the average of their European competitors in terms of the weight of commissions on total assets.
Stable costs and growing productivity
Given essentially stable operating costs, profitability is also supported by the persistence of loan adjustments at exceptionally low values, with an impact on loans of 23 basis points. This leads to an overall net result for the 9 months of over 19 billion, up by 22.4% compared to 30 September 2023, with a Roe of 15.7%.
There was also a limited increase in personnel costs (+ 2%), despite the salary increases resulting from the renewal of the national collective labor agreement. In this regard, the decline in the number of employed people (-2.03%) has an impact. The closure of branches continues (225 closed in the period).
In terms of efficiency, the personnel cost/operating income (25%) and cost/income (40.1%) indicators set record values, the latter being well below the average of the major European groups (53.2%). Productivity indices also leap forward: the primary margin per capita rises by 9.8%, with commissions per employee growing by 9.8%, and the operating result per capita records an increase of +14.2%.
Non-performing loans under control
Another strong point is the quality of the credit, with a minimal incidence of net impaired loans (1.4%) and with the strong contraction of stage 2 loans (-21.3%). Capitalization remains high: the Cet1 ratio is slightly increasing (from 14.92% to 15.19%), also favored by a decrease in RWA, the risk-weighted assets, more than proportional to the decline in loans since 31 December 2023.
Direct funding was substantially stable (+0.6%) while indirect funding was increasing (+8.5%) benefiting from the good performance of the financial markets.
Colombani: we need ad hoc credit offering policies and new consultancy models
“The decline in credit is consolidating as a peculiar phenomenon of the Italian banking system. The contraction in loans by large groups is in fact not reflected among banks significant of the rest of Europe. It is an alarm signal, given the extent of the reduction and the persistence of the trend, which cannot be explained only by the lackluster performance of the economic cycle, i.e. by the decrease in the demand for credit. In fact, the anemic economic situation affects the entire continent. It follows that the main reason for the worrying disengagement of banks from credit – underlines the general secretary of First Cisl Riccardo Colombani – consists in the increase in risk aversion on the part of banks”.
“And yet – continues Colombani – the money management margin is actually increasing and there are no risks on the horizon of worsening credit quality, which today is truly optimal: stable NPLs, very low cost of credit, stage 2 loans decreasing significant. In this very positive context, the strategy of the big companies aimed at increasing commissions, especially from investment services, is also evident. This is demonstrated by the emergence of insurance banking models, the strengthening ofasset management and the declared desire to focus on wealth management.”
“Net commissions on an annual basis represent 1% of assets, a measure well above the average of European banks and in particular of French, Spanish and above all German banks. There are, therefore, the ideal conditions, on the one hand, to implement credit offer conditions aimed at stimulating investments for the transformation of production systems and on the other – concludes Colombani – to create consultancy models that are oriented towards pursuing the best interest of all customers and not conditioned by the margins on the individual financial products placed”.
Here is the analysis of the quarterly reports of the big 5 banks to 30 September 2024
