Quarterly more than solid for Intesa Sanpaolo, which beats analysts' expectations with profit growth of almost +18% and forecasts a solid increase in revenues for 2024, profits above 8 billion (in 2024 and 2025) and a strong distribution of value for shareholders with a cash payout ratio of 70%, an increase in the dividend in 2024 and 2025 and a 1,7 billion buyback to start in June 2024.
"We had best start to the year ever“, explained the CEO of Intesa Sanpaolo Charles Messina during the conference call with analysts, underlining that it was "the best quarter ever for net operating income (+11%), operating result (+18%) and gross continuing profit (+17%)".
“The solidity of the results obtained in the first quarter of 2024 confirms Intesa Sanpaolo as European leader for high and sustainable profitability, capital strength and low risk profile, with a unique role in supporting the real and social economy of our country", he commented Messina, according to which the bank represents “a unique model in Europe”, which will work even after the European Central Bank starts cutting rates, a move expected as early as June.
Intesa Sanpaolo's quarterly report: profit up 17,6% to 2,3 billion
The bank led by Carlo Messina closed the first quarter of 2024 with a net profit of 2,3 billion euros, up by 17,6% compared to the same period in 2023. The figure beats market expectations, which expected a profit of around 2,1 billion, and represents the "best quarterly net result since 2007", according to underlined the Ad.
The operating profit settles at 6,73 billion on expectations of 6,61 billion, the intermediation margin (NII) for 3,93 billion is above expectations of 3,91 billion. In the three months double-digit increase (+11,1% to 6,7 billion) also for operating income net, with net interest rose by 20,8% to 3,9 billion e net commissions to 2,3 billion (+6,3%). And this, Messina specifies "thanks to the strong acceleration of commissions and operating profit".
However, they remain substantially stable (+1,3%) at 2,6 billion operating costs, for in relationship cost/income down to 38,2%, "among the best among the major European banks", underlines the bank in a note. On the front of npl the total of impaired loans amounts, net of value adjustments, to 4,96 billion, down 0,2% compared to the end of 2023. The incidence of impaired loans on total loans is equal to 1,2% at net of value adjustments and 2,3% gross.
“The savings entrusted to us by families and businesses grew by 28 billion in the quarter, exceeding 1.300 billion euros; the strong attention to costs despite the growth in technological investments allows us to achieve the best result ever in terms of cost/income – highlights the CEO – The flow of NPLs at historic lows brings the annualized cost of risk to 22 basis points, accompanied to an increase in coverage".
Turning to capital solidity, the coefficient Cet 1 stands at 13,3%, deducting from the capital 1,6 billion in dividends accrued in the quarter and the 1,7 billion buyback to be started in June and "without considering approximately 120 cents of benefit points deriving from the absorption of the DTAs" .
Finally, exposure to Russia is in further decline, decreasing by approximately 84% (over 3 billion euros) compared to the end of June 2022 and falling to 0,1% of the group's total customer loans.
The collection and results of the individual divisions
La direct bank deposits is equal to 576 billion, in line with 31 December 2023 and an increase of 7,8% compared to 31 March 2023, while the direct insurance income is equal to 174 billion, up by 0,6% compared to the end of 2023 and down by 1% compared to 31 March 2023. The indirect collection amounts to 750 billion (+3,9% since December and +10,8% annually), with managed savings at 453 billion (+2,1% and +4,2%), new life business at 3,6 billion and assets under administration at 297 billion, (+6,7% and +22,7%). Finally, regarding the results of the individual divisions, the Bank of the Territories closed the quarter with a profit of 588 million (-14,6% compared to the first quarter of 2023), the division Imi Cib with 468 million (+18,8%), le foreign subsidiaries with 318 million (-13,1%), the private banking with 409 million (+19,2%), theAsset management with 163 million (+26,4%) and the Insurance division with 241 million (+19,9%).
Intesa Sanpaolo confirms targets, 2024-2025 profit above 8 billion
“The implementation of the 2022-2025 business plan is proceeding at full speed,” highlights Intesa Sanpaolo, which confirms the profitability objectives. In 2024 and 2025, in particular, net profit will exceed 8 billion of Euro. Not only that, in the current year, the bank led by Carlo Messina plans “a solid revenue growth, driven by a further increase in net interest and an increase in net commissions and the result of the insurance activity based on the group's leadership in the Wealth Management, Protection & Advisory activity, a stability in operating costs, despite investments in technology , especially as a result of lower personnel expenses, a low cost of risk, resulting from 'zero NPL' bank status and by the high quality of the credit portfolio and a reduction in taxes and other charges relating to the banking system, as there is no longer any contribution to the resolution fund".
Intesa Sanpaolo has the possibility of proceeding with new buybacks but will have a prudent attitude on share buyback operations "because we don't need to compete on the outlook with other banks. We are the incumbent as a value creator and we are probably the most sustainable bank in Europe“, Messina declared during the conference call. “We don't need to increase the share price to do M&A operations, we have already done our acquisitions,” she added, reiterating that Don't be a “super fan” of buybacks, which must be balanced by cash dividends. “I think there is too much focus on the short term in the market now,” she concluded.
Intesa Sanpaolo: dividend rises again, €1,7 billion buyback in June
Intesa Sanpaolo also confirms the cash payouts equal to 70% of the consolidated net profit for each year of the business plan, and promises a dividend increase per share relating to 2024 and 2025 compared to the amount disbursed in 2023. Further capital distributions "for 2024 and 2025" will finally be "to be evaluated year by year", underlines the bank.
"In the month of May we will distribute dividends of 2,8 billion euros as the balance for the 2023 financial year", recalls CEO Carlo Messina who underlines how "in the first quarter of 2024 the net profit was 2,3 billion, up 18% compared to the first quarter of 2023 and allows us to set aside dividends of 1,6 billion euros”.
Then there is the buyback of own shares which will start in June, for another 1,7 billion. Overall, also considering the buyback "in 2024 we will distribute 7,3 billion to shareholders“, highlighted the CEO.
Profumo president of Isybank
In this context, Intesa Sanpaolo announces that the former president of Compagnia San Paolo Francesco Profumo becomes president of Isybank, the digital bank of the group, in place of Mario Boselli, who will occupy the position of vice president. Antonio Valitutti remains CEO and Vanna Alfieri, Giampio Bracchi, Renato Cerioli, Achille Galdini, Paola Papanicolau and Claudia Vassena also sit on the board of directors.
“Thanks to the presidency of Francesco Profumo, Isybank will be able to benefit from strong skills, a broad wealth of experience, a notable sensitivity towards innovation in an international projection – commented Messina -. All this in line with our positioning as a European leader also in the technological field, thanks to the substantial investments made, equal to 3 billion euros from 2022 to today".
Messina also underlines the technological innovation of Intesa Sanpaolo, also talking about the approximately 1800 IT specialists already hired. “Isybank, the group's digital bank, will bring approx one million new customers by 2025; Fideuram Direct, the digital Wealth Management platform for Private Banking, will have 150.000 customers in 2025; artificial intelligence, around 150 Apps and 300 specialists at the end of the plan".
The reaction of the stock on the stock market
Despite a quarterly result above expectations, Intesa Sanpaolo shares lost 3,48% to 3,45 euros in the wake of the prudent position reiterated by Messina on the buyback. The strong weakness of the entire banking sector (FTSE Italia Banks -2,3%) is also weighing down the shares. However, the Intesa stock has outperformed the European banking index by 2% in the last month, while it has gained over 31% since the beginning of the year.
(Last update: 16.43 pm on 3 May).
