(Finance) – Le large Italian banks (Intesa Sanpaolo, UniCredit, BPM desk, BPER And MPS Bank) have registered a aggregate net profit of 3.9 billion euros in fourth quarter 2022, which compares with an aggregate net loss of €0.7 billion in the fourth quarter of 2021, according to a new DBRS Morningstar report on the subject. For the 2022 financial year, aggregate net income was 12.8 billion euros, up 66% year on year. The growth is 80% excluding the impact from Russia/Ukraine, the badwill deriving from the acquisition of Banca Carige by BPER and the restructuring costs net of the positive tax impact of Banca MPS.
“Fiscal 2022 results benefited from higher revenues, flat operating expenses and lower underlying credit costs,” he explained Andrew Costanzovice president of the DBRS Morningstar Global Financial Institutions team.
Revenues for FY 2022 were supported by a major net interest income (NII)which reflects the accelerated rate hikes interest rates in the second half of 2022. “The full benefit from the interest rate increase will be visible in the coming quarters, however we expect the likely increase in the sensitivity of deposits and wholesale funding to updated interest rates will reduce some of the upside” Costanzo added.
According to DBRS Morningstar, the cost optimization measures they will remain key to addressing high inflation, higher customer energy bills, digital investments and stricter practices related to the transition to a sustainable economy.
The loan loss adjustments they increased year-on-year in FY2022. Excluding the impact from Russia/Ukraine, however, loan loss provisions decreased thanks to improved risk profiles. The fourth quarter of 2022 saw an increase from the previous quarter due to seasonality and a preventive approach to future risks.
The average cost of risk in 2022 it remained below the levels recorded in 2019-2021 and banks are working on a further reduction in 2023, as provisions for Russia and Ukraine and for future de-risking are expected to affect the sector less. Nonetheless, according to the report, the cost of risk could rise in the coming quarters if the economy slows more than expected and default rates deviate substantially from current levels.
Finally, analysts note that metrics on asset quality further improved in the fourth quarter of 2022 and the capital reserves they remain solid.