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Capitalia 2005 net profit at $1.2b

Capitalia, at the centre of merger speculation in Italy, issued results just days after its veteran Chairman Cesare Geronzi was suspended by an Italian court following judicial inquiries related to the collapse of dairy firm Parmalat.

Chief Executive Matteo Arpe, seen as the main driver behind the bank’s turnaround since he took over four years ago, said again Capitalia wanted to take part in the expected new round of banking consolidation in Italy.

But he said the bank was not in merger talks with any other lender, adding that the chances of seeing a takeover of Capitalia in the near future were nil.

“I think the probability of this option is zero,” Arpe said after presenting Capitalia’s results to analysts.

He also reiterated he was not interested in defensive moves, but only in opportunities that made industrial sense.

“We are part of a market. We won’t stay still in a completely moving market,” Arpe said.

Capitalia’s stock, already up more than 70 per cent on the year, was up 2.7 per cent at 6.51 euros by 1302 GMT, topping a slight rise on the European DJ Stoxx bank index.

The stock had plummeted to about 1 euro when Arpe took over.

“We do not see in this set of results a catalyst for a further appreciation of the stock price after the recent strong rally, although the positive newsflow on Italian banking consolidation may still drive the performance,” Deutsche Bank analyst Marco Veroni said in a note after the results.

The bank is seen as a target and Italian media have speculated about a possible tie-up between Capitalia and larger lender Banca Intesa, which both banks denied.

“The results are excellent. This is a completely new firm compared to the old Capitalia,” said one Milan-based trader.

“We can now say this is a healthy bank.”

Arpe is turning branch offices at the bank into one-stop shops for tax payments, property transactions and pension services as well as introducing longer and more flexible opening hours.

Capitalia’s 2004 results had been heavily dented by the writedown of non-performing loans, with net profit restated under Europe’s new IFRS accounting standards at 306 million euros.

Analysts polled by Reuters had on average expected the bank to make a net profit in 2005 of 940 million euros.

The bank said writedowns and provisions had fallen 59.4 per cent to 589 million euros at the end of 2005.