To our shareholders

At the Annual General Meeting held on April 27^th, 5,000 shareholders were represented - holders of approximately 52% of the social capital. The approval of the excellent 2023 balance sheet was almost unanimous as was the dividend to be paid, 0.56 euro gross per share. The approval of the institutional investors was matched by that of the ‘traditional’ shareholders, in particular those members of the ‘Insieme per la Popolare’ an association that aims to bring together the kind of shareholder support seen throughout the Bank’s history, not just shareholders in the province of Sondrio but also those in different areas of the country. It is a shareholder group that clearly has the Bank’s interests and future at heart.

Net profit end 2023 was € 392.8m compared to the € 212.9m of the previous year, an increase therefore of 84.5%. It is worthy of note that the proceeds from traditional banking activities such as interest margins and commission showed a significant rise, underlining our healthy commercial position in our operational areas.

Overall, at a group level the net profit was € 461.2m compared to the € 251.3m in 2022 thanks to the satisfactory contributions of our subsidiaries, Banca Popolare di Sondrio (SUISSE) SA, BNT Banca Spa and Factorit Spa.

In the first quarter of the current financial year the Group has totalled a net profit of € 145.2m compared to € 94.4m in the same period last year, an increase of more than 53.8%. This is an excellent result that goes far beyond the forecast of the Bank’s present Business Plan. ROE stands at 15.3%, Cost-Ratio Income has risen to 36.9%, Gross NPL ratio is 3.8% with a net figure of 1.6% and the CET 1 stands at 15.1%. These are results that place us in a very favourable spotlight in the banking sector.

The results continue and lead us to hope well for the future.

All our branches and various offices have worked well across the board in the knowledge that their work has no boundaries, offering our clients the latest products with various interesting financial opportunities. The International Division has provided full support for those companies involved abroad, organizing conferences and seminars in an attempt to help them grow and increase competitive strength on the world markets. The Commercial Banking Division and Banking Insurance were ahead of the game, promoting new integrated products to provide up-to-date solutions in line with changing markets and consumer needs with a view to guaranteeing satisfactory returns in terms of service and insurance cover. The I.T. Systems Service has invested significantly in an ever-increasingly complex technological field offering security and support for our clients.

Customer savings deposits have been destined for loans and financial support to those deserving clients across the country and in this respect, we believe we have maintained our reputation as an efficient professional bank with a particular focus on local communities, thanks to sound, in-depth local knowledge of the areas in which we operate, acting wisely and carefully managing the funds entrusted to us.

As for funding, we have diversified the sources for medium-long term maturity turning to institutional investors, as well as traditional retail clients, through the issue of covered bonds, subordinate Tier 2 and Senior Preferred Green, the latter aimed at financing our clients’ ESG transition (Environmental Social Governance.

Being able to identify the needs of the community, individuals and businesses is an essential skill if we are to assist in making informed decisions. We are strong believers in financial education, supported by the FFduF, a foundation promoted by the Italian Banking Association (ABI) to pursue this aim, an aim that must be of interest to people of all ages. For some time now in the banking system there has been a trend of closing down staffed branches. Moving against this trend, in the first six months of the current year the BPS has opened new branches in Trieste and Conigliano Veneto strengthening its presence and creating new jobs in the hard-working north easterly area of the country. The Bank has welcomed 112 new employees since the beginning of the year, an important footnote.

In addition to the mass media and general public’s positive comments on our performance, we are pleased to report the opinions of some of the most prestigious rating companies. Beginning with S&P Global ratings (known previously as Standard &Poor’s) which, recognizing the commercial strength, asset quality and solid financial funding and liquidity position as well as the proven validity of the current Business Plan, assigned an investment grade rating of BBB- with a ‘Stable’ outlook. Scope Ratings underlined, amongst other positive aspects, the ability of the Group to achieve above average profit levels compared to other Italian banks and confirmed its previous issuing investment grade rating of BBB maintaining the ‘Stable’ outlook. In similar mode, Fitch Ratings recognized the improvement in the Bank’s overall business profile and its de-risking progress which has produced earlier than expected results and hence the Long-term Issuer Default Rating assigned was BBB with ‘Stable’ outlook. The London-based rating agency Standard Ethics which attributes non-financially oriented ratings, raised its evaluation from ‘EE’ to ‘EE+’ with Outlook ‘Positive’, having seen excellent conformity levels linked to ESG parameters.

We have dedicated constant attention to our cultural activities starting with our company magazine ‘Notiziario’ which has been much appreciated by its numerous readers. The Swiss subsidiary BPS (SUISSE) cultural publication hosted a substantial monograph on Audrey Hepburn, a well-known actress in the second half of the 1900s. Ms Hepburn was actively involved with Unicef in various developing countries.

In February of last year, originating from an idea by Professor Marco Vitale, there was the conference on the topic of ‘Development and the Banking System. Guidelines for New Progress’ held in the Bank’s conference centre in Sondrio. The conference focused on, among other aspects, the commendable work of medium and small size banks which, operating in a territorial context, experience and support the day-to-day difficulties of local businesses and the community.

The Bank has also collaborated with conferences, exhibitions, events and seminars held by other organizations as well as free-time activities and sporting activities such as those events linked to the stage of the Giro d’Italia that arrived in Livigno.

Dear Shareholder, Dear Friend,

Delivering results is possible, yet the pressure of change that shows us what is only in the immediate future urges us to look further in order to understand what we can and must do.

It is therefore essential to experience and comprehend the underlying causes of a scenario in constant evolution which often changes without warning, due also to the forces of technological upheaval. It is our duty to face reality because a merely defensive strategy could never shield us from an ever more global context. The key lies in discovering hidden potential, without offering resistance but handling the situation and managing the risks.

Governed by algorithms, our lives are becoming increasing digital and the confines between reality and virtuality become less distinct, yet as long as the process is gradual and managed, the system will be able to metabolize the effects and reap adequate benefits. Artificial Intelligence too, an extraordinary product of human creativity, does offer opportunities.

The debate on Artificial Intelligence is very much alive insomuch as whether it be conversational or generative, it redefines our relationship with reality and knowledge, human rapport, the economy, how work is organized and has a strong impact in terms of polarizing skills. It is also more important than ever to bear in mind that machines should never compete with homo faber whose critical thinking is unique and irreplaceable yet they should be of aid in the pursuit of progress. Technology is not our destiny. We are the ones who create it and inspire ethics also in Artificial Intelligence which we hope will be integrated into global legislation.

Change, if grasped in the right way, is an opportunity. However, it is essential to provide people with an adequate educational process in terms of inclusivity during this transition period in order to raise an awareness that tradition and innovation work hand in hand and strengthen each other reciprocally.

Healthy optimism, sound vision and the constant ability to react quickly to change are the necessary ingredients that must blend together if we are to protect the environment for future generations.

Pollution is infecting our planet. We have no way of knowing exactly the extent and time lines of climate change yet we must face our responsibility in a determined manner. This is what we are doing in close collaboration with our corporate clients in an attempt to raise awareness of the importance of preserving our environment and guaranteeing its sustainability, both individually and collectively, through a carefully planned transition process. Only in this way will we be able to achieve a rational, balanced use of our remaining resources and assure basic human rights.

The economy moves swiftly and efficiently and our existence in the markets is based solidly on one value that cannot be betrayed: trust. Trust from investors and savers and mutual trust between operators in various economic sectors.

The challenge is to act with criteria, common sense and enthusiasm in accordance with the rules, weighing up the pros and cons, balancing innovation with experience and adaptation with knowledge.

The summer has just begun. A season traditionally dedicated to rest and relaxation. We hope that these moments of peace and quiet may serve to bring rejuvenation and reinvigoration for all.

With best wishes.

 

Chief Executive Officer and General Manager
(Mario Alberto Pedranzini)

President
(Francesco Venosta)