Acceleration of business model reshaping Mediobanca to become long-term value player
Substantial growth In high-margin banking activities (GOP forecast to reach €1bn; 3-year CAGR +10%)
Prioritized development of new Wealth Management division (target contribution 40% of Group fee income)
100% of Banca Esperia acquired
Increasing capital generation optimization of capital management and allocation processes (further stake disposals of €1.3bn targeted)
Definitive transformation to diversified banking group Banking activities’ contribution to group GOP up to 80% (from 60%) Strong reduction in capital allocated to PI (from 33% to 20%)
Further enhancement in Asset quality
ROTE 10%, CET1 ratio 14%
200 bps capital available for acquisitions
The Mediobanca Group has emerged stronger after the financial crisis with reference to its resilience, reputation, solidity and profitability. This has been possible due to the Group’s specific strengths: its distinctive DNA and culture, sound positioning in specialized high-margin banking activities, ability to adapt the business model to changes in the regulatory framework and market trends, and ability to grow while reshaping. In the past three years in particular, the Group has focused on creating a simpler business model, selling the majority of our equity stakes, and developing operations in capital-light, high fee-generating banking businesses.
The 2013-16 period covered by the previous strategic plan delivered the following results:
These results and the strategic reshaping process have enabled the Mediobanca stock market price to outperform the European banking index over the past three years.
The current competitive situation, characterized by the adverse macroeconomic scenario, stricter regulation and increasing investments required in technology, means that solid banks are set to grow while less capitalized and efficient banks will increasingly be forced to restructure. This will create substantial opportunities for Mediobanca to grow in the CIB, Consumer Banking and Wealth Management sector.
In order to seize these opportunities and with a view to prioritizing growth in Wealth Management business, a new Business Unit segmentation has been adopted as follows:
For the period-end (30 June 2019) the CIB division has set the following objectives:
The above actions, along with the proven effectiveness of the credit pricing/management/recovery system, will drive a further reduction in the cost of risk.
For the period-end (30 June 2019) the CB division has set the following objectives:
For the period-end (30 June 2019) the WM division has set the following objectives:
For the period-end (30 June 2019) the PI division has set the following objectives:
Its Mediobanca Group 2016-19 strategic plan, which confirms the definitive reshaping of its business model focusing on specialized high-margin banking businesses. Accelerating growth in these activities while at the same time optimizing capital use and allocation will enable Mediobanca to upgrade definitively to become a long-term value player.
The Group will benefit from:
By the end of this three-year growth path the Group will have an even more sustainable, diversified and valuable business model, able to generate high income and capital, while matching outstanding balance-sheet content with efficiency.