# Italy’s MPS sees ‘safe habour’ ahead after strong quarter Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-02-08 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Italian Bank Monte dei Paschi Di Siena Beats Profit Meta Description: Discover how MPS improved its financial performance, increased capital buffers, and positioned itself for future growth in the fourth quarter. URL: https://financedigest.com/italys-mps-sees-safe-habour-ahead-after-strong-quarterhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-02-08t070624z1lynxmpej1709ertroptp4monte-dei-paschi-results-1736814472953-compressed.jpg) By Valentina Za MILAN (Reuters) -Italian state-owned bank Monte dei Paschi di Siena (MPS) on Wednesday joined peers in solidly beating profit forecasts, thanks to a boost from higher interest rates. MPS also began to reap the benefits of cost cuts in the fourth quarter ending Dec. 31, after using part of the proceeds from a make-or-break 2.5 billion euro ($2.7 billion) new share sale in November to [pay for costly voluntary early](https://www.financedigest.com/7-questions-to-ask-before-paying-off-your-mortgage-early.html "7 Questions to Ask Before Paying Off Your Mortgage Early") staff exits. “After a long and difficult sailing at sight … we’re in a position to choose the best safe harbour … and we will get there for sure,” said CEO Luigi Lovaglio, who took over at MPS exactly a [year ago and who will run](https://www.financedigest.com/london-ranked-as-europes-most-attractive-city-for-businesses-and-employees-for-second-year-running.html "London ranked as Europe’s most attractive city for businesses and employees for second year running") for reappointment in April. Between the latest cash call and a 2017 bailout, Italian taxpayers have pumped a total of 7 [billion euros into the Tuscan bank](https://www.financedigest.com/first-abu-dhabi-bank-could-renew-35-billion-offer-for-stanchart-bloomberg-news.html "First Abu Dhabi Bank could renew billion offer for StanChart -Bloomberg News"), which is 64%-owned by the state. The government is expected to look for a buyer after it names a new board in April, allowing it to [cut its holding as agreed with the European Union](https://www.financedigest.com/telecom-italia-in-talks-with-unions-on-up-to-2000-job-cuts-in-italy.html "Telecom Italia in talks with unions on up to 2,000 job cuts in Italy"). [Italy failed to clinch a sale](https://www.financedigest.com/italy-inflation-adjusted-retail-sales-fell-in-2022.html "Italy inflation-adjusted retail sales fell in 2022") of MPS to UniCredit in 2021 and won more time from the EU for its exit. In the quarter, MPS increased its [capital buffers](https://www.financedigest.com/austrian-regulator-orders-system-relevant-banks-to-up-capital-buffers.html "Austrian regulator orders system-relevant banks to up capital buffers") by nearly one percentage point, including by reducing its risk-weighted assets (RWA) ahead of an expected RWA increase driven by regulation. Rival Intesa Sanpaolo also slashed its RWA in the [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% 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 ratio stood at 15.6% at the end of December, up from 14.7% after it completed the [share sale](https://www.financedigest.com/monte-dei-paschi-to-have-underwriting-consortium-for-share-sale-by-tuesday-source.html "Monte dei Paschi to have underwriting consortium for share sale by Tuesday – source"). Lovaglio said legal claims facing MPS, which in the past have complicated re-privatisation efforts, would prove instead “a [significant surprise in terms of value”](https://www.financedigest.com/smart-mining-market-projected-to-gain-significant-value-by-2016-2025.html "Smart Mining Market Projected to Gain Significant Value by 2016-2025") in any future merger deal. The bank is facing total legal claims of 4.1 billion euros, after receiving another 700 [million euro](https://www.financedigest.com/hellofresh-sees-2023-core-profit-of-460-540-million-euros.html "HelloFresh sees 2023 core profit of 460-540 million euros") complaint in January. However, Lovaglio said provisions were more than adequate given that some claims are unsupported by documents and in light of the positive outcome for MPS in ongoing court proceedings. Net income came in at 156 [million euros](https://www.financedigest.com/amazon-grants-1-5-million-euros-to-dutch-seaweed-farm-project.html "Amazon grants 1.5 million euros to Dutch seaweed farm project") in the October-December period, roughly twice the 75 million euros consensus forecast from analysts in a poll provided by the bank. Geared to benefit strongly from [higher rates](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop"), like other Italian lenders, MPS said its net interest margin rose by almost a third in the fourth quarter from the previous one and was up 54% annually. After sending more than 4,000 staff into [early retirement](https://www.financedigest.com/how-to-retire-early.html "How to retire early"), MPS said its cost-to-income ratio fell to 60% in the fourth quarter from 72% previously. ($1 = 0.9307 euros) (Reporting by Valentina Za, editing by Gavin Jones and Sharon Singleton) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---