Italy's banks deliver strong shareholder returns amid M&A surge

Italian lenders led European bank stocks higher in the second quarter amid a flurry of M&A activity and strong earnings.

Banco di Desio e della Brianza SpA and Banca Monte dei Paschi di Siena SpA (BMPS) each reported a total return of more than 60% between March 31 and June 30. Banca Generali SpA, Banco BPM SpA, UniCredit SpA and Banca Mediolanum SpA returned more than 30%, according to S&P Global Market Intelligence data.

Austria's Raiffeisen Bank International AG and Dutch bank ABN AMRO Bank NV were among the other strong performers, while only two banks recorded double-digit negative returns. The sample includes European banks, excluding those in Russia and Ukraine, with a market capitalization greater than €1 billion.

Italian bank shares were buoyed by news of offers for BMPS by Intesa Sanpaolo SpA and Banco BPM in early June.

A successful Intesa bid would result in much of BMPS' retail network being taken over by BPER Banca SpA to address antitrust concerns, and would rank as the largest European bank deal in a decade.

Other recent transactions in the Italian bank market have demonstrated significant cost synergies and minimal execution risk, S&P Global Ratings said in a June 9 report. Recent deals included the €15 billion takeover of Mediobanca Banca di Credito Finanziario SpA by BMPS in 2025.

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Italy's five largest banks reported strong first-quarter profits in May, with an aggregate year-over-year increase of 11.4% and each lender surpassing analyst expectations. The bottom-line results were driven by strong revenue growth. The banks have also paid out higher dividends in recent quarters, supported by robust earnings.

Türkiye-based QNB Bank AS was the worst-performing European bank stock in the second quarter. The bank, which is majority owned by Qatar National Bank, has a small free float, which can lead to volatility. The next worst performer was Hungary-based MBH Bank Nyrt.

On a monthly basis, Italian banks also delivered strong returns in June, as did Türkiye-based Yapi ve Kredi Bankasi AŞ and Akbank TAS and Austria's BAWAG Group AG, Erste Group Bank AG and Raiffeisen Bank International. The Austrian banking sector has also seen a surge of M&A activity in recent months.

As a whole, Europe's banks outperformed their US and Asian peers in the second quarter, with the S&P Europe BMI banks index returning 22.8%, compared to 14.1% for the S&P 500 bank index of US banks and 8.6% for the S&P Pan Asia BMI banks index.

Europe's banks underperformed US lenders in June.