Mediobanca profit tops forecast as wealth management shift advances

MILAN (Reuters) -Italy's Mediobanca posted a better-than-expected first-half net profit on Friday, as higher interest rates boosted income from lending and a renewed focus on wealth management paid off.

The bank, with a financial year running from July to June, is "fully on track" to meet targets set out in the strategy to 2026 it presented in May, Chief Executive Alberto Nagel told a press briefing.

"These results are not only improving, they represent the new vision of the group .... Our growth has been solid and very effective in terms of capital generation and absorption," he said.

At 15.3% of risk weighted assets, core capital was above expectations, Citi analysts said.

Under the strategy, Mediobanca aims to make its wealth management division the main growth driver, while the Corporate & Investment Banking (CIB) business will be shifted to less capital-intensive activities.

As a result, the bank grew its total financial assets (TFA) by 5.5 billion euros to 94 billion euros in the first half of its current fiscal year, while risk-weighted assets fell by 5%.

Net profit rose 10% year-on-year to 611 million euros ($658 million), above a bank-provided analyst consensus of 596 million euros.

Revenue rose 4% to 1.73 billion euros, broadly in line with estimates, boosted by an 18% increase in net interest income (NII) to 997 million euros.

Nagel said that NII, a measure of profit from the gap between lending rates and deposit costs, would grow by around 10% this year, regardless of trends in interest rates, with further increases in 2025 and 2026.

Fees fell 11% as a strong performance in the wealth management division failed to offset a decline in the CIB business.

However, Mediobanca flagged a "significant reversal" of the fee trend in the second quarter thanks to the contribution of London-based tech advisory firm Arma Partners, which Mediobanca bought last year.

Mediobanca will pay its first interim dividend in May based on a cash payout ratio of 70%.

($1 = 0.9286 euros)

(Reporting by Gianluca Semeraro; editing by Kirsten Donovan)