Banco BPM SpA reported reclassified, consolidated full-year 2017 net income of €2.62 billion, compared to a net loss of €1.61 billion a year earlier.
Excluding badwill and impairment on goodwill and client relationships, the bank booked net income of €557.8 million, compared to a net loss of €1.33 billion in 2016. The 2017 result included the sale of the bank's entire stake in Aletti Gestielle SGR SpA to Anima Holding SpA, which generated a gross capital gain of approximately €700 million.
Net interest income remained relatively unchanged on a yearly basis at €2.11 billion, while net fee and commission income increased to €2.09 billion from €1.90 billion in 2016. Net adjustments on loans to customers dropped year over year to €1.66 billion from €2.96 billion, while net provisions for risks and charges declined to €13.8 million from €55.1 million.
For the fourth quarter of 2017, Banco BPM reported a net loss of €512.5 million, down from €981.1 million in the same period in 2016. Excluding impairment on goodwill and client relationship, the bank booked net income of €505.1 million, compared to a loss of €702.1 million in the prior-year period.
Banco BPM said it aims to reduce its nonperforming loans by 57% by the end of 2020 by raising its bad loan sales target to about €13 billion from €8 billion under a new derisking plan.
Meanwhile, Banco BPM signed a binding memorandum of understanding with BNP Paribas SA unit BNP Paribas Securities Services for the sale of its custodian banking and fund administration business activities for a cash amount of €200 million. Banco BPM said the deal will generate a pretax capital gain of the same amount, resulting in a positive impact of 33 basis points to its CET1 ratio, based on the fully phased CET1 ratio as of Dec. 31, 2017.
The bank also reached an agreement with Anima Holding on the disposal from unit Banca Aletti & C. SpA to Anima SGR of the delegated portfolio management of the insurance assets currently carried out on behalf of the insurance joint ventures related to the network of the former Banco Popolare, as well as a 20-year partnership related to the transfer to Anima SGR of the assets underlying insurance products placed by Banco BPM's network.
Banco BPM said a cash consideration of €120 million has been agreed for the deal, which will result in a positive impact of 20 basis points on its CET1 ratio, based on the fully phased CET1 ratio as of Dec. 31, 2017.
Both transactions are expected to close by the end of June. Barclays Bank acted as sole financial adviser to Banco BPM on both transactions, while Legance Avvocati Associati assisted as legal adviser.
Pro forma for the disposals and the impact of new accounting rules known as IFRS 9, the bank's fully loaded common equity Tier 1 ratio stood at 12.02% at year-end. The phased-in CET1 ratio was 12.36%, while the fully loaded CET1 ratio excluding disposals and IFRS 9 was 11.92%.
