MB Mediobanca Banca di Credito Finanziario SpA

   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 acquisitions.

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 business.

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 insurer.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

November 12, 2019 08:25 ET (13:25 GMT)

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