BAMI.MI WACC - Weighted Average Cost of Capital
The WACC of Banco BPM SpA (BAMI.MI) is 8.8%.
| Range | Selected | |
| Cost of equity | 15.4% - 23.1% | 19.25% |
| Tax rate | 27.7% - 30.1% | 28.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.5% - 10.0% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.42 | 1.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.4% | 23.1% |
| Tax rate | 27.7% | 30.1% |
| Debt/Equity ratio | 2.01 | 2.01 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.5% | 10.0% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BAMI.MI | Banco BPM SpA | 2.01 | 1.13 | 0.47 |
| ALPHA.AT | Alpha Bank SA | 0.8 | 1.78 | 1.14 |
| BCP.LS | Banco Comercial Portugues SA | 0.5 | 0.67 | 0.49 |
| BIRG.IR | Bank of Ireland Group PLC | 0.97 | 1.31 | 0.77 |
| BPE.MI | Bper Banca SpA | 2.33 | 1.35 | 0.51 |
| EUROB.AT | Eurobank Ergasias Services and Holdings SA | 0.64 | 1.42 | 0.98 |
| NOFI.OL | Norwegian Finans Holding ASA | 0.35 | 1.76 | 1.41 |
| SPL.WA | Santander Bank Polska SA | 0.3 | 1.31 | 1.07 |
| TPEIR.AT | Piraeus Financial Holdings SA | 0.56 | 1.81 | 1.29 |
| VMUK.L | Virgin Money UK PLC | 5.91 | 0.86 | 0.16 |
| Low | High | |
| Unlevered beta | 0.67 | 1.02 |
| Relevered beta | 1.63 | 2.46 |
| Adjusted relevered beta | 1.42 | 1.98 |
BAMI.MI's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for BAMI.MI:
cost_of_equity (19.25%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.42) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.