A cura di Credit Suisse
After the derating in December due to EBA guidelines uncertainties and the slightly increasing SREP requirements, Italian banks had a good start in 2018. Some good news on the NPL side and expectations of manageable outcome from the Italian election are driving Italian banks rerating.
Europe and debt the big absents from the political debate so far – Italian politicians do not seem to consider how to cope with the reduction of the public debt and the commitments with EU. However the coalitions’ detailed programs are still missing and the campaign has just started. Whatever the election’s outcome, a grand coalition (new normal in Europe) could take over limiting risks of a populists’ government.
2018 SREP: slightly up – At system level, we flag an average increase of the P2R by +6bps yoy (from 2.11% to 2.17%), while the total fully loaded overall capital requirement (OCR) rose by +12bps from 9.45% to 9.57%. The ECB is carefully looking at the NPL plans of the banks and is more lenient with banks setting ambitious and aggressive NPL reduction targets.
NPL reduction main catalyst for Italian banks: strategic option ahead for Intesa SanPaolo – The main theme for Italian banks in 2018 is asset quality again. The start of the year was good, with Intesa is currently in talks with Intrum for a potential €10bn NPL disposal which could help the banks to achieve 11.4% gross NPE ratio, anticipating the achievement of the 2019 target, and the disposal of the Capital Light Bank (or part of it).
Regulatory headwinds “diluted” in the long run – EBA guidelines and Basel 4 are expected to deploy their negative impacts in the long run. The calendar provisioning needs final approval, but we tend to believe that the main risk may come from a potential clean-up action on the NPE stock imposed by the ECB. Banks are already taking spontaneous actions to speed up the process. Focus on Intesa, top pick among Italian banks (OP, €3.2TP) ahead of the plan announcement (expected in February).
