Italy's Monte dei Paschi di Siena (BMPS.MI) on Friday posted third-quarter profit that topped estimates and raised its 2025 outlook, ahead of presenting a new strategy early next year following the acquisition of rival Mediobanca (MDBI.MI).
Monte dei Paschi (MPS), which was rescued by the state in 2017 and successfully re-privatised leaving Rome with a stake of 4.9%, completed the Mediobanca takeover in September.
It will incorporate Mediobanca's results into its earnings from October 1, it said.
The acquisition of prestigious merchant bank Mediobanca by a bailed-out rival shocked Italy's financial world and marks the biggest and boldest deal yet in an M&A wave sweeping the sector.
Net profit for the three months through September was 474 million euros ($553 million), up from 407 million euros a year earlier and well above a company gathered analyst consensus of 366 million euros.
Shares rose 5% by 0824 GMT, outperforming a flat Italian bank index (.FTLMS3010).
MPS CEO Luigi Lovaglio told analysts pre-tax profit in the full year would "well exceed" 1.6 billion euros, raising a prior estimate he gave in August for pre-tax profit well above 1.5 billion euros.
Lovaglio, a former UniCredit executive hired by Italy's Treasury in 2022 to turn MPS around, defended the merits of the Mediobanca tie-up, which initially met with investor scepticism because it combined a commercial lender with a merchant bank.
Lovaglio said Mediobanca would remain a separate legal entity with its own brand to preserve its identity.
"MPS and Mediobanca are ... complementary ... the result is a more resilient, diversified and innovative group ... the industrial rationale was there from the get-go," Lovaglio said.
The merger allows MPS to tap tax credits stemming from past losses, boosting profits, which Lovaglio said would be fully distributed to shareholders.
MPS revenues held broadly steady year-on-year at around 1 billion euros, thanks to higher trading income and net fees, despite lower interest rates weighing on lending income. Analysts had expected revenues to decline to 973 million euros.
($1 = 0.8575 euros)
