Italy's Poste predicts profit growth as shifts insurance risk

Poste Italiane (PST.MI) said on Thursday it expected to increase its operating profit by 9% this year after falling short of market expectations in 2022 due to one-off charges, and proposed hiking its dividend per share for both years.

Italy's post office, whose business spans areas from parcels and mail to payments, insurance and financial services, said it would be able to offset higher costs and the loss on an energy start-up thanks to solid commercial trends driving revenues.

State-owned Poste said it had struck a deal with five top global re-insurers in the fourth quarter to help manage "lapse risks", or the risk that higher interest rates prompt customers to redeem their insurance policies ahead of time.

This boosted its solvency ratio, a key measure of an insurer's strength, to 253% by the end of December from 207% in September, it said.

Poste's earnings before interest and tax (EBIT) of 237 million euros in the October-December period were 13% below market consensus, analysts said, and its shares were down 0.3% by 0757 GMT.

The earnings miss resulted from 320 million euros in non-cash provisions which Poste booked in the last quarter on its nine billion euro portfolio of tax credits.

Poste has been an avid buyer of tax credits that building companies in Italy benefited from under government incentive schemes to promote energy efficiency.

To monetize the tax credits firms sold them on at a discount instead of claiming them over a number of years.

Marred by frauds which saw companies claim credits by faking invoices, the schemes have now been halted after they led to a spike in Rome's budget deficit.

Poste forecast an operating profit of 2.5 billion euros this year, up from 2.29 billion in 2022, and proposed hiking its dividend per share by 10% for 2022 and by 9% the following year.

"The dividend-per-share guidance clearly showcases management's confidence in its earnings and capital outlook where we believe the market remains on the cautious side," Morgan Stanley analysts said.

Reuters