Italian Banks: Rates Tailwind Starts to Show

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Italian Banks: Rates Tailwind Starts to Show

Italy | Banks EquityJulyResearch17, 2026

KEY STOCKS FEATURED INCLUDE:Italian Banks: Rates Tailwind Starts to Show

We expect a solid 2Q from Italian banks, with NII trends improving as higher TICKER RATING PRICE TARGET

rates feed through, fees supported by strong markets, costs remaining under ISP IM BUY €7.20

control and asset quality resilient. Among our names, ISP could surprise BAMI IM HOLD €14.50

positively on trading income, BPER should benefit from the TRS gain and

excess capital deployment, while BAMI remains largely driven by ongoing M&A

speculation.

Interest income: higher rates starting to flow through, supporting the P&L in 2Q, when we expect

NII to grow by 3% QoQ on average, thanks to higher margins and favorable daycount, and a growing

loan book. As a result, we project the YoY trend in NII to improve from -3% in 1Q to flat YoY on

aggregate for BAMI, ISP, and BPE.

Commission income: helpful markets to sustain running fees. MSCI world was up 14% in Euro

terms in 2Q, which will support market-related fees. On the other end, traditional banking fees have

been performing modestly; however, we anticipate a continued slow-burn improvement, broadly in

line with the improvement in lending growth. As a result, we expect commission income to improve

YoY growth trends from +1% to +5% on aggregate for these companies.

Costs, continuation of the trends: In 1Q, these banks shrank costs by c. 3% YoY on average, with

the trends at BPE helped by some accounting changes. We expect the trend to continue. We have

seen requests for salary increases from trade unions. These are part of negotiations between banks

and unions, and we expect salary inflation to be managed through continued sector-level workforce

reductions.