BPER (1K) | Buy (vs Hold) | Great opportunity deal on BMPS

Research evidence excerpt

BPER (1K) | Buy (vs Hold) | Great opportunity deal on BMPS

's EPS adj. 1.16 1.24 1.29

second bank with c. EUR170bn loans and EUR225bn deposits, and to exploit total Consensus EPS 1.15 1.30 1.37

synergies, preliminary estimated in EUR800m. FY to 31/12 (EUR) 12/26E 12/27E 12/28E

Deconstructing the forecasts P/E adj. and fully diluted(x) 10.6 9.9 9.5

P/BV (x) 1.5 1.4 1.3

We estimate the EUR800m preliminary synergies would stand at 16% of revenues P/TBV (x) 1.6 1.5 1.5

and at 45% of the related cost base, a level that may look challenging but Dividend yield 7.3% 7.8% 8.1%

achievable in our view by BPER's management team, which has a strong track RoTBV 15.1% 15.8% 15.7%

record of integrations (from UBI branches to Carige and BPSO) based on an RoE after tax 14.1% 14.4% 14.4% CET 1 ratio 15.2% 15.7% 16.5%

updated IT digital platform. We estimate the restructuring charges to be equal to Cost income ratio 43.2% 41.4% 40.5%

one year of cost synergies (or EUR500m). Net NPL ratio (on loans) 1.0% 1.0% 0.9%

Based on a transaction price of EUR3.5bn generating no goodwill and a full-paper Sector Most Pref. Sector Least Pref.

payment with the issuance of c.290m new shares at current market prices, we Barclays Banco BPM

expect BPER's capital position to remain at 14.9%. Raiffeisen Bank International CaixaBank Santander Svenska Handelsbanken

We also estimate a very high ROI of 28% arising from the deal, with a value

creation of about EUR1bn or EUR 0.5 per BPER share (before transaction),

generating a 10% EPS accretion by 2028 (50% of synergies delivered).

Valuation and investment conclusion

We add the EUR0.5 per share estimated value creation from the potential deal to

our EUR13.3 standalone target price. With a 14% potential upside, we upgrade the Luigi Tramontana