Bain: banks give attention to wealth administration and insurance policies | EUROtoday

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The rise in rates of interest has decided the robust progress in income of Italian banks within the final two years. But the expectations of an upcoming fee discount by the ECB suggest that, to take care of excessive ranges of profitability, banks should give attention to progress in commissions, significantly from wealth administration and bancassurance. This, briefly, is likely one of the essential conclusions reached by the in depth report on the banking system by the consultancy agency Bain & Company which was introduced yesterday in Milan and which additionally analyzed the adjustments within the service mannequin and the results on the banking enterprise. of the event of generative synthetic intelligence.

Benefits for savers

More efficient administration isn’t solely within the curiosity of the banks but in addition of Italian savers, they argue from Bain, as a result of «in an financial context characterised by inflation and fast rise in rates of interest, households have suffered a discount in actual earnings (-2 % in 2023 in comparison with 2021), to which they responded by lowering consumption (-4.5% between '23 and '21) and rising the share of earnings saved (+1.7% between '23 and '21)”.

Supported by the growth in interest margin (+82% in the last two years), Italian banks closed a record 2023, with revenues growing by 40% compared to 2021 and profits almost tripling. The capitalization of the major Italian banks increased by 40% in 2023 alone. and the markets recognized an outperformance of the sector, with the return of the FTSE MIB banks index doubling that of the Eurostoxx 50.

If this is the market context, observes the Bain report, in recent years Italians have become impoverished: net financial wealth in real terms fell by 14% between 2021 and 2022. Even compared to other European countries and taking referring to the period between 2011 and 2022, the picture is not rosy as the net financial wealth of Italians has grown less than that of the French and Germans. Among the most important causes, there are poor information (less than 10% of Italians inform themselves about the markets for at least an hour a week), low propensity to invest (less than 5% save with the aim of investing) and focus on low risk products (48% of financial wealth held in deposits, compared to 43% of the European average and approximately 15% in the UK).

Value creation

«The Italian banking system is solid and healthy» commented Luca Penna, Head of Financial Services Southern & Eastern Europe at Bain & Company, «profits and the multiple between stock market value and net worth (P/BV) have grown , but the price earning has reduced. Those who are able to stabilize prospective profits will still have important opportunities to create value for shareholders. Banks will also be able to play a key role in preserving the real purchasing power of Italians, creating financial awareness and building simple and clear value propositions.”