Italian state-owned bank Monte dei Paschi di Siena has today posted a much larger-than-expected quarterly profit, as rising interest rates boosted revenues and job cuts lowered its costs.
Monte dei Paschi di Siena is 64% owned by the state.
It said it had increased its capital buffers by nearly one percentage point in the three months to December, including by reducing its risk-weighted assets (RWA).
Rival Intesa Sanpaolo last week also said it had slashed its RWA in the fourth quarter to boost capital and offset a revision in the internal models it uses to weigh asset risks.
MPS said its core capital stood at 15.6% of its RWA at the end of December, up from 14.7% in November after it completed a make-or-break €2.5 billion new share issue in tough markets.
Taking into account the cash call, Italian taxpayers have pumped a total of €7 billion into the Tuscan bank, which is expected to look for a buyer after it names a new board in April.
To meet re-privatisation commitments taken with the European Union, Italy sought to clinch a sale of MPS to UniCredit in 2021 but failed to reach a deal.
Net income came in at €156m in the three months from October to December, roughly twice the €75m forecast by analysts polled by the bank.
Geared to benefit strongly from European Central Bank monetary policy tightening like other Italian lenders, MPS said its net interest margin rose by almost a third in the fourth quarter from the previous three months and was up 54% from a year earlier.
After using the money raised in the November cash call to lay off thousands of staff through an expensive voluntary early retirement scheme, MPS said its cost-to-income ratio fell to 60% in the fourth quarter from 72% previously.
