Mediobanca to Return Up to EUR2.5 Billion to Shareholders Through 2023
By Pietro Lombardi
Mediobanca is targeting higher earnings, revenue and
profitability through 2023, while planning to return up to 2.5
billion euros ($2.76 billion) to shareholders via dividends and
buybacks and continuing in its strategy of growing via targeted
The new plan comes at a time of significant changes for the
investment bank. Last week, Italy's largest lender UniCredit SpA
(UCG.MI) sold its stake in the bank, ending a relationship spanning
over 70 years and leaving Italian billionaire and founder of
eyewear behemoth Luxottica, Leonardo Del Vecchio as the major
shareholder in Mediobanca, with a 9.9% stake. It also comes as the
banking industry faces a tough environment, with regulatory changes
compounding negative interest rates and low economic growth.
The bank targets revenue growth of 4% per year to EUR3 billion,
it said Tuesday, as it presented its new strategic plan through
2023. Earnings per share are seen rising 4% per year, while the
bank's return on tangible equity, a key measure of profitability,
is expected to reach 11% from the 10.2% it reported for fiscal
2019. These results should be reached thanks to growth across the
bank's business segments: Revenue should rise 8% yearly in the
wealth-management business, while the corporate and investment
banking business's top line is seen growing 6% per year. Revenue in
the consumer-banking unit is expected to grow 3% per year.
Mediobanca plans to increase shareholder remuneration by 50%,
compared with the previous plan, to up to EUR2.5 billion over the
plan's period. Of this, EUR1.9 billion will be in dividends, with
an additional EUR300 million to EUR600 million through buybacks.
Dividend per share is expected to grow by 10% in 2020 and 5% in
each of the following years, reaching EUR0.60 per share at the end
of the plan.
The bank will also continue with its M&A strategy.
"Companies which are able to accelerate the process of growing
the Mediobanca Group's core businesses will be considered as
potentially attractive targets, with a preference for
capital-light, high fee-generating businesses which are an
excellent fit for Mediobanca in terms of culture, ethics and
business approach," it said.
Mediobanca closed the previous plan achieving the targets it had
set and posting for fiscal 2019 its best yearly results in a decade
in terms of revenue, operating profit and net profit. The return on
tangible equity was 10.2% while the payout ratio was 50%.
In recent years Mediobanca has sold a number of stakes in other
companies using the proceeds to boost its corporate and
investment-banking business, as well as retail and
wealth-management operations. For example, it bought a 51% stake in
London-based credit manager Cairn Capital Group Ltd. from Royal
Bank of Scotland Group PLC (RBS.LN) and other institutional
investors and bought Barclays PLC's (BARC.LN) Italian retail
The bank still has a 13% stake in Assicurazioni Generali SpA
(G.MI), Europe's third-largest insurer. Mr. Del Vecchio has
recently criticized the bank's management in Italian media, for its
reliance on Generali's stake and on its consumer-credit unit
Compass. He called for a stronger focus on its investment banking
business. Mr. Del Vecchio also has a stake just shy of 5% in the
Write to Pietro Lombardi at email@example.com
(END) Dow Jones Newswires
November 12, 2019 08:25 ET (13:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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