UPDATE 2-Italy's Nexi seals SIA merger as core profit grows

(Adds CEO comments, details)

MILAN, Feb 11 (Reuters) - Italy’s biggest payment group Nexi on Thursday met its “aspirational target” of 600 million euros ($727 million) core profit for 2020 after cutting costs to offset a drop in transactions caused by the pandemic.

Nexi also said it had signed a binding accord for its proposed all-share merger with rival SIA following a preliminary memorandum of understanding in October.

Just over a month later Nexi also signed a merger deal with Nordic rival Nets, riding a consolidation wave in the fast-growing payments industry.

CEO Paolo Bertoluzzo told analysts Nexi expected to conclude the Nets deal in the second quarter and the SIA merger in the third, creating a major European player next to France’s Worldline, itself fresh from the acquisition of Ingenico.

By mid-2021 Nexi also expects to close the acquisition of the retailers’ payment business of UBI Banca, which it is buying after a similar deal with Intesa Sanpaolo. Intesa has taken over UBI to create Italy’s biggest bank.

Nexi said it hoped to grow revenues at a mid-to-high single digit rate this year after a 2.8% drop in 2020, provided Italy gradually emerges from the health emergency in the first half of the year. Revenue totalled 1.04 billion euros in 2020.

Bertoluzzo cautioned that the guidance on revenue growth was the mid-point of a broader range with the actual number contingent on the evolution of the pandemic.

Despite the lower turnover as Italy wrestled with two COVID-19 waves in the spring and the autumn, Nexi reported a 2.5% rise in core profit.

Restrictions Italy introduced to fight a resurgence of the virus drove the volume of transactions down 8.6% in the fourth quarter, Nexi said, adding there had been signs of recovery in January.

Bertoluzzo also pointed to an acceleration in digital payments, thanks also to government incentives.

Nexi shares closed up 1.5%.

Rival SIA on Thursday reported a 2% rise in 2020 revenues to 748 million euros and a core profit up 3% to 285 million euros. ($1 = 0.8249 euros) (Reporting by Elisa Anzolin; editing by Agnieszka Flak and Elaine Hardcastle)