Italy's Fineco cuts 2023 lending income forecast on deposit drop

(Reuters) -Italian asset gatherer FinecoBank on Tuesday trimmed its guidance for net financial income this year as customers shifted cash out of current accounts in search of better returns, sending its shares down 5.7%.

Chief Executive Alessandro Foti told analysts Fineco expected customer deposits to drop by 2 billion euros in 2023, after previously estimating growth of 1 billion.

Like many other lenders, Fineco does not reward liquidity, and Foti said deposits had bottomed out as customers shifted cash into investments or kept so-called 'transactional liquidity', or money they need for possible purchases.

Net financial income, a profit measure that combines the bank's treasury portfolio and interest rates earned on loans after payments on deposits, will grow around 70% from 2022, Fineco said.

Fineco reverted to its initial forecast after upgrading it in February when it said net financial income would rise by 80% in 2023.

"This guidance ... is below the current consensus," Citi analyst Azzurra Guelfi said.

Fineco said net financial income would peak in the fourth quarter to around 13% above the first-quarter level.

Higher yields on Italian government bonds pose a problem only for specialised lenders which had begun "massively overpaying for deposits," Foti said.

The Milan-listed bank said net profit for the first quarter was 147.3 million euros ($162 million), up 19% from a year earlier, broadly in line with a Refinitiv analyst consensus.

Net financial income rose 46.5% in January-March to 157.4 million euros, reflecting a 165.3% jump in the net interest margin, with no contribution from the treasury portfolio for a second straight quarter.

($1 = 0.9084 euros)

(Reporting by Carlo Giovanni Boffa and Valentina ZaEditing by Keith Weir and Richard Chang)