With a pilot plant net profit close to 2 billion of Euro Intesa Sanpaolo in 2023 it achieved the best start to the year ever and the best first quarter in the last 16 years. Thanks to this record start, the bank has increased the guidance on the net result for 2023 to almost 7 billion euros. The reaction of the title was immediate on the stock exchange it rises by 3,7% at 2,432 euros per share.
"2023 opened in a particularly positive way for Intesa Sanpaolo: we confirmed the ability to generate sustainable profitability even in complex contexts, obtaining a net profit of almost 2 billion euro", declared the CEO Carlo Messina.
Intesa Sanpaolo's record first quarter
In the first three months of 2023, the bank led by Carlo Messina beat analysts' expectations and recorded a Net income equal to 1,96 billion euro, up by 87,5% compared to 1,04 billion in the same period of 2022 and to 1,08 billion in the fourth quarter of 2022. The result is driven by net interest, which rose to 3,254 billion euros, up 6,2% compared to the fourth quarter of 2022 and 66,3% compared to the first quarter of last year.
“In the first three months of the year, the growth in interest income made it possible to increase net income, consequently the accrued dividends amount to 1,4 billion euros: of these, approximately 40% is intended for Italian families and our shareholder foundations, allowing for important social interventions in the territories to which they belong,” explained Messina.
Going ahead with the numbers, i net operating income they recorded an increase of 11,9% to 6,1 billion, with net commissions to 2,1 billion (-6,6% compared to the first 3 months of 2022 and -3,8% compared to the fourth quarter of 2022). In particular, commissions from banking and commercial activities increased by 1,6%, while those from management, brokerage and consultancy activities decreased by 8%. In this context, the bank recorded an increase of 0,9% for the component relating to intermediation and placement of securities, a decrease of 12,8% for that relating to managed savings (with performance commissions equal to 8 million euro in the first quarter of 2022) and 1,7% for that relating to insurance products. The Rresult of the insurance business amounted to 397 million euros, up by 5 million on the first quarter of 2022.
Basically stable (+0,5%) i operating costs, equal to 2,5 billion, for a cost/income ratio dropped to 41,9%.
Speaking of capital solidity, the coefficient Cet 1 it stood at 13,7% after deducting 1,4 billion in dividends accrued in the quarter. Confirmed the objective of a Cet1 above 12% over the period of the 2022-25 plan according to Basel 3/Basel 4 with a target of around 14,5% pre-Basel 4 and 14% post-Basel 4 in 2025.
Il cost of risk in the first quarter of 2023 annualized it is at 17 basis points (from 70 in 2022, 30 excluding provisions for exposure to Russia and Ukraine, for overlays and to encourage de-risking, net of the release based on adjustments provisions made in 2020 for future impacts of COVID-19), with €0,9 billion of overlay for generic provisions still available.
Compared to the end of 2022, at the end of March 2023 lo stock of non-performing loans it decreased by 2,1% net of value adjustments and increased by 1,2% gross.
The exposure to Russia continues to decrease
Intesa Sanpaolo's exposure to Russia continues to decline, decreased by about 70% (over 2,5 billion euros) compared to the end of June 2022 and dropped to 0,2% of the group's total customer loans. Furthermore, cross-border loans to Russia "are largely performing and classified as Stage 2", the bank clarified in a note.
Intesa raises its guidance for 2023: "Clear and strong increase for 2025 target"
The formula of the 2022-2025 Business Plan is “confirmed, with a perspective of clear and strong upside for the target of 6,5 billion euros of net profit in 2025 deriving from the increase in interest rates”, announces Intesa which for 2023 estimates a significant increase in operating profit, resulting from solid revenue growth driven by net interest (net interest in 2023 expected to be over €13 billion) and a continued focus on cost management, and a sharp decline in net adjustments to loans, resulting in a growth of net income to approximately 7 billion euro.
Previously Intesa had estimated a result "well above the 5,5 billion of net profit in 2022". The target for 2023 is therefore already above the 6,5 billion euro set by the business plan as a target for 2025.
Messina: In 2023 5,8 billion to shareholders
“The solid and positive results of the first three months of the year allow us to increase the 2023 net profit forecast to 7 billion euros. This year we can distribute to our shareholders 5,8 billion considered: the May dividend, the second tranche of the buyback, and the November interim dividend. These are important resources, not only for our shareholders but for the country's economy. Thanks to the prospect of greater profitability, we will further accelerate projects in favor of those who find themselves in situations of particular social hardship", declared the CEO Carlo Messina.
Understanding provides a cash payout ratio equal to 70% of the consolidated net profit for each year of the Business Plan, with any further distribution to be assessed year by year.
“It is clear that at the end of the year we will have to consider whether to somehow distribute part of the market to the market excess capital“, added Messina during the conference call on the quarterly accounts. "This year we will already distribute a significant amount and therefore at the moment I see no reason to make further commitments - she specified - but it is clear that the bank has significant excess capital". The banker then explained that it will be necessary to look at the ratio between share price and equity to decide how to make the distribution, noting that at the moment the balance would probably tip in favor of the distribution of reserves rather than a new buyback”.
Messina on the tax on banks: "The money goes to emergencies"
“The hypothesis of an increase in taxation on bank profits is under discussion, in consideration of revenues from growing interest margins, in the current situation of rate hikes by the ECB,” Messina said, adding that: “We will observe with I respect every decision made by the Government. At the same time we hope that these additional levies, in the event that new tax rules are applied, will be used to deal with major emergencies of the country, that of the growth of inequalities, by adopting measures in favor of those who find themselves in greater difficulty".
Messina: "Isybank launch by the summer"
“The launch of the new Isybank digital bank, with almost 400 specialists, is expected by the summer", announced Messina, adding that "The strengthening of the digital skills of the bank's core business continues decisively - he adds - We continue to invest in the levers of growth, in particular in innovation technology".
Messina on inflation: "30 billion for businesses and households"
“We are aware of the strong impact that inflation is having on households and for these reasons already in 2022 we have allocated 30 billion euros in favor of businesses and households, giving the possibility to suspend or remodulate mortgages and loans, granting disbursements at subsidized rates and allowing zero-interest installments; this confirms Intesa Sanpaolo's role of reference for the real economy – Messina said -. Our disbursement program to support the implementation of the PNRR is over 400 billion euros".
Intesa also strengthened “the initiatives to counter the inequalities and foster financial, social, educational and cultural inclusion with 10,5 billion euros of social credit and urban regeneration between 2022 and the first quarter of 2023", explained the CEO, also underlining the expansion of the food and shelter program for people in difficulty with around 24,3 million interventions between 2022 and the first quarter of 2023".
“We confirm our commitment to projects for promote employability such as the “Giovani e Lavoro” program aimed at training and accessing the Italian job market for over 3.000 young people. At the same time, support for education sees us at the forefront with a strengthening of partnerships with the main Italian universities and schools. We participate in "Futura", the new program promoted by Save the Children, Forum Inequality and Diversity and YolkTM, to fight educational poverty among women and early school leaving", concluded the manager.
