MPS: 2023 EBA EU-wide stress test results best ever results, confirming the strong solidity achieved by the Group
FULLY LOADED CET1 RATIO IN THE ADVERSE SCENARIO AT 10.13% IN 2025, RISING TO 11.98% CONSIDERING THE COST SAVINGS, AS REPORTED IN THE EBA NOTE, STEMMING FROM OVER 4,000 STAFF EXITS CONCLUDED ON 1st DECEMBER 2022, WHICH ARE NOT CONSIDERED IN THE PROJECTIONS UNDER THE STRESS TEST METHODOLOGY
Siena, 28 July 2023 – The Montepaschi Group was subject to the 2023 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the European Central Bank (ECB) and the European Systemic Risk Board (ESRB).
The Group notes the announcements made today by the EBA and the ECB on the EU-wide stress test and acknowledges the outcomes of this exercise.
The 2023 EU-wide stress test does not contain a pass fail threshold and instead is designed to be used as an important source of information for the purposes of the SREP. The results of the stress test will assist the competent Authorities in assessing the Group's ability to meet the applicable prudential requirements under stressed scenarios.
The adverse stress test scenario was set by the ECB/ESRB and covers a three-year time horizon (2023-2025). The stress test has been carried out applying a static balance sheet assumption as of December 2022 and a number of constraints to the profit and loss accounts.
The results, as reported in the EBA note, under the stress test methodology do not consider the benefits – in terms of higher profits and additional capital – generated by the HR cost savings of 857 million euro over the 3-year horizon, related to >4,000 staff exits concluded on 1st December 2022.
The Common Equity Tier 1 ratio (CET1%) fully loaded in 2025 as per the stress test exercise is equal to (the delta vs the level of 15.64% reported as at 31 December 2022 is presented in parentheses):
- Base scenario
18.61% (+297bps) rising to 19.83% (+419bps) considering the benefits of the above mentioned HR cost savings;
- Adverse scenario
10.13% (-551bps) rising to 11.98% (-366bps) considering the benefits of the above mentioned HR cost savings.
The results, best ever in the Montepaschi Group’s stress test exercises, confirm the strong solidity achieved by the Group and its capability to generate sustainable profitability, proven also by the positive net results in years 2024 and 2025 even in the adverse scenario, considering the HR cost savings.
The stress test exercise results are not forecast of either the financial performance or the capital ratios of the Montepaschi Group.