Not even Covid-19 stops Intesa Sanpaolo. The Italian bank, in addition to being at the forefront of supporting the healthcare system in the midst of an emergency (with a donation of 100 million but not only), continues to grind profits even in the first quarter of this difficult 2020. And investors appreciate it too , given that after the announcement of the results, the stock rose by almost 3%, much better than the average of the FtseMib. Coming to the useful, compared to the first quarter of 2019 it grew by almost 10%, exceeding one billion of euros to 1,151 billion. The result, also up on the fourth quarter of last year, would have been even larger (1,36 billion) excluding the provision for the coronavirus emergency, and even more positive (2,3 billion) counting the capital gain from 900 million of the Nexi operation.
However, Covid will have a negative effect, and it is on the profit forecasts for the whole of 2020: the target has been revised to 3 billion. However, the other fundamentals are also growing solidly: result of operating management +27%, gross income +9%, operating income +11,7%, operating costs down by 2,7% and cost/income ratio at 44,4%. Intesa Sanpaolo also communicated an improvement in credit quality: gross non-performing loans have already decreased by 23 billion since the end of 2017 and therefore almost 90% of the plan to 2021 can be considered already completed from this point of view. The ratio of non-performing loans to total loans fell to 7,1% gross of adjustments and 3,5% net.
The annualized cost of risk in the first quarter of 2020 fell to 40 basis points, while Intesa's capitalization is confirmed as solid as ever: as at 31 March, taking into account 863 million euro of dividends accrued in the quarter, the fully loaded pro-forma Common Equity Tier 1 ratio was 14,5%, the top level among the major European banks, and the figure calculated applying the transitional criteria in force for 2020 to 14,2%. As regards the merger with Ubi Banca, which despite the resistance of the major shareholders of the Lombard bank should close within the year, Intesa Sanpaolo maintains that the profit of the new bank will rise to 5 billion in 2022, with the payout at 75% in 2020 and 70% in 2021.
In communicating the brilliant results, Intesa Sanpaolo was once again keen to underline its commitment to the country, in a particularly difficult moment. In addition to the various charitable and support initiatives, the bank announced that it is "an accelerator of the real economy": around 17 billion euros of new medium-long term credit disbursed in the first quarter of 2020, with around 14 billion in Italy, of which around 11 billion disbursed to households and small and medium-sized enterprises; over 3.100 Italian companies brought back to performing from non-performing credit positions in the first quarter of 2020 and around 115.000 since 2014, preserving around 16.000 and 575.000 jobs respectively. To consult all the sustainability and social and cultural responsibility projects, you can visit the site.
The publication of the results was then accompanied by a long statement by the CEO Charles Messina, who spoke on the Covid crisis but above all on financial issues: “It is our ability to be profitable and efficient that allows us to look ahead and further strengthen our balance sheet. The solidity of our balance sheet also derives from the significant reduction in NPLs achieved in recent years, having reached 2009 levels in terms of stock and ratios, with a robust coverage ratio of 54%. This is thanks to our internal capabilities and strategic partnerships, which have made it possible to obtain these results at no cost to shareholders".
We plan to maintain high levels of profitability - continued the manager -: we expect a net profit of at least 2020 billion euros for 3, while for 2021 the forecast is at least 3,5 billion euros. At the same time we expect to maintain a solid capital position with a Common Equity ratio above 13%”. Ubi Messina did not fail to reiterate Intesa Sanpaolo's position on the operation: "We are convinced that in the current scenario and in what will follow in the coming months, our proposal to UBI's shareholders acquires greater strategic value and represents for UBI a an even more relevant perspective: high capitalisation, robust coverage of non-performing loans, size, diversification and investment capacity are now more valuable than in normal times. We offer UBI shareholders the opportunity to merge with the strongest operator in the country and one of the strongest in Europe, Intesa Sanpaolo: a group that has always worked for the benefit of its people, all customers, its shareholders and in the interest of the communities it belongs to”.
“We will bring these qualifying traits – he added – to the territories where UBI is present. We believe that significant value generation is largely achievable even in the case of subscription of only 50% + 1 share of UBI. We intend to implement a project that aims to generate further benefits for all stakeholders and provide solid support to the real and social economy, with an overall strengthening of Italy".
