Italy’s leading bank Intesa Sanpaolo, which merged with its counterpart Ubi Banca, saw its net profit climb 17.8% to 3.02 billion euros in the first half of the year, in a context still disrupted by the Covid-19 pandemic.
The first Italian bank Intesa Sanpaolo has seen its net profit climb by 17.8% to 3.02 billion euros in the first half of the year, in an economic context still disrupted by the Covid-19 pandemic.
Intesa Sanpaolo said Wednesday that it is “on track to achieve an annual net profit of at least 4 billion euros”, thus revising upwards its target for 2021, which previously aimed at a result “well above 3.5 billion euros”.
“The first half of the year has been excellent, the best since 2008, despite the continuing impact of the pandemic,” commented the bank’s director, Carlo Messina, at a conference with analysts.
The bank has decided to pamper its shareholders, paying them 1.9 billion euros in dividends for the 2020 results in October, after having already distributed 694 million euros in May for this purpose.
For 2021, it plans interim dividends of 1.4 billion euros payable in November.
In the second quarter, net profit reached 1.5 billion euros, up 6.5%, well above the expectations of Factset analysts who were expecting 884 million euros.
These results “confirm Intesa Sanpaolo’s ability to deal effectively with the difficult consequences of the Covid-19 epidemic,” the bank commented in a statement.
In the first quarter of 2021, the bank had posted a net profit of 1.51 billion euros, up 31.7%.
Net fees rose 13.2% to 4.68 billion euros in the six months, a record amount for Intesa Sanpaolo.
Conversely, net interest income fell by 3.2% to 3.9 billion euros, due to lower market rates and weak credit demand.
Lower bad debts
At the same time, operating costs fell by 2.3% to 5.2 billion Euro.
The bank’s common equity ratio, an index that measures its ability to cope with a crisis, stood at 15.7% at the end of June, a very high level.
In the first half of the year, the bank continued to reduce its stock of bad debts, which amounted to 9.7 billion euros, down 9.6% from the 10.7 billion recorded at the end of 2020.
After the acquisition of Ubi Banca, Intesa Sanpaolo had seen its accounts plunge into the red in the fourth quarter of 2020, with a loss of 3.09 billion euros, but it had generated a net profit of 3.27 billion euros for the full year.
The absorption has been successful, according to Intesa Sanpaolo, which confirmed on Wednesday that synergies from the merger are expected to reach more than 1 billion euros per year.
Intesa Sanpaolo had successfully concluded in July 2020 a takeover bid and exchange offer (Tender / Exchange Offer) for Ubi Banca. This operation valued Ubi at 4.2 billion euros.
The group born of the merger, finalized in April, is sitting on a treasure trove of some 1,100 billion euros in client assets and is targeting a net profit of at least 5 billion euros in 2022.