Intesa SanPaolo, the bank led by Carlo Messina, does not betray market expectations, on the contrary, it beats them. And to the delight of the employees, the great announcement also arrivesdirectly from the bank’s number one, which decides to reward its employees:
employees who face the consequences of the war between Russia and Ukraine directly on their wallets, in a context where inflation is confirmed as one of the cruelest taxes to pay:
“We present the results for the first half of 2022 in an extraordinarily complex context. The conflict unleashed by Russia in Ukraine caused a serious international crisis. The economic situation is marked by the notable increase in inflation – which already at the beginning of the year showed first evidence – and the consequent increase in social difficulties. For this reason we have decided to allocate to all our people in Italy and abroad – except those who have a managerial function or equivalent – an extraordinary financial contribution of around 500 euros, for a total amount of around 50 million euros in favor of 82,000 people in our Group. At the same time – continued the ceo of Intesa SanPaolo – we continue to support the Ukrainian population, thanks to the donation of 10 million euros decided after the outbreak of the conflict, with significant humanitarian initiatives. Our closeness to the people of Pravex Bank was made possible by the numerous colleagues who have activated welcome initiatives in Italy and in neighboring countries where we are present ”.
Intesa SanPaolo rewards shareholders and employees
Therefore satisfied not only the shareholders, with the bank determined to continue to reward them with buybacks and dividends, but also the employees.
The accounts of the second quarter and the first half of 2022 are liked by the market: on the stock market, Intesa SanPaolo shares rose by more than + 2%.
Thanks to the publication of solid results, Intesa SanPaolo confirmed the target of 6.5 billion euros of net profit in 2025. For the current year, the bank said it expects a net profit of over 4 billion euros assuming that there are no critical changes in the supply of raw materials-energy; net profit well above 3 billion euros even with the very conservative assumption of a coverage of approximately 40% of the exposure to Russia and Ukraine, which involves moving most of the exhibit to Stage 3. The bank expects a solid capital position, with a fully phased-in Common Equity Tier 1 ratio target greater than 12% over the horizon of the 2022-2025 Business Plan according to the Basel 3-Basel 4 rules.
On the dividend and buyback front, the shareholders are preparing to make a good feast of returns on capital, with a payout ratio equal to 70% of the consolidated net profit in each year of the Business Plan (1,648 million euros already accrued at based on net profit for the first half of 2022).
Intesa: interim cash dividend on 2022 results of at least 1.1 billion
The news that emerged from today’s press release is that the board of directors has also provided as interim cash dividends to be distributed on the results of 2022 an amount not less than 1.1 billion euros. The board resolution regarding the interim dividend will be defined on 4 November next, on the occasion of the approval of the consolidated results as at 30 September 2022, in relation to the results of the third quarter of 2022 and those expected for the fourth quarter of 2022.
It is also expected a further distribution to shareholders of € 3.4 billion via buyback, of which 1.7 billion in progress and 1.7 billion to be executed subject to the resolution – within the approval of the results as at 31 December 2022 – by the Board of Directors; and the bank considers a possible further distribution to be evaluated year by year starting from 2023.
It was the CEO of Intesa SanPaolo himself, Carlo Messina, in commenting on the results of the first half of 2022, to reiterate that the creation and distribution of value remain a priority for the Italian bank.
“The results achieved in the first half of 2022 are further demonstration of how Intesa Sanpaolo is able, in extremely complex contexts, to generate significant and sustainable profitability thanks to a highly diversified and resilient business model, to the benefit of all stakeholders”.
“We confirm the goal of 6.5 billion net income by 2025 and 70% dividend payout in each year of the business plan. The further remuneration of the shareholders through the buyback operation has already started with the first tranche of 1.7 billion “. Precisely, “Strong value creation and value distribution will continue to be our priority”.
Messina also noted that “the upward trend in rates, the bank’s ability to manage costs with great attention e flexibility, the massive deleveraging achieved – thanks to which we have reached the lowest levels ever in terms of stock of non-performing loans and NPL ratio – they represent the driving force for further growth, even in a highly complex context such as the current one “.
Intesa SanPaolo: second quarter net profit of 1.330 billion, better estimates
Returning to the accounts, in the first half of the year Intesa SanPaolo reported net operating income up 0.9% compared to the first half of 2021, to 10.756 billion euros.
- In the second quarter net revenues amounted to € 5.347 billion, better than the 5.08 billion expected by the consensus.
- Net profit stood at 1.330 billion in the second quarter of 2022, up from 1.024 billion in the first quarter of 2022 and better than the 1.01 billion expected by the consensus. In the first half of 2022, the net result of Intesa SanPaolo was of € 2.354 billion, down from 3.023 billion in the first half of 2021.
- In the second quarter of 2022, Intesa SanPaolo reported net interest of € 2.091 billion, up 6.9% compared to 1.956 billion in the first quarter of 2022 and 4.8% compared to 1.995 billion in the second quarter of 2021. The interest margin beat analysts’ expectations, who had forecast a value of 1.99 billion.
- Net commissions amounted to € 2.248 billion, down by 1.4% compared to € 2.281 billion in the first quarter of 2022.
- Also in the second quarter of 2022 net adjustments to loans amounted to 730 million euros (including € 292 million for exposure to Russia and Ukraine), compared to € 702 million in Q1 2022 (which included € 801 million for exposure to Russia and Ukraine and approximately € 300 million for the release of generic adjustments made in 2020 for future impacts of COVID-19) and 599 million in the second quarter of 2021.
- The amount of other net provisions and net value adjustments on other activities it amounted to 63 million euros, compared to 60 million in the first quarter of 2022 and 220 million in the second quarter of 2021 (including approximately 125 million for the strengthening of insurance reserves).
Intesa SanPaolo, Messina comments on the accounts
Carlo Messina summarized the numbers that emerged from the accounts as follows:
“Excluding the provisions / write-downs relating to the exposure to Russia and Ukraine of 1.1 billion, the net result for the half year was 3.3 billion euro; 2.35 billion is the net book result. In the first half we have already accrued 1.6 billion euros in dividends. Net interest rates show a notable acceleration: in the second quarter the increase is 6.9% compared to the first quarter of the year. In the first six months of the year, the operating result increased by 4.2% compared to the first half of last year ”.
“As we continue to invest in growth levers, costs are further reduced by 2.5% compared to the first half of last year and the cost / income level reached at 30 June – equal to 47.5% – places us at the top levels among the major European banks ”.
Messina continued, noting that “Startup activities for the new digital bank, Isybank, that can make a significant contribution to improving the cost structure, proceed swiftly: after the definition of the partnership with the market leader Thought Machine, we are giving impetus to the new unit (Isy Tech) for the development of Isybank with 230 specialists; the strengthening of the digital skills of the Bank’s core business continues with determination ”.
“In the first half of the year – Messina pointed out again – we achieved a further improvement in asset quality thanks to a reduction in gross non-performing loans of 4.1 billion compared to the end of 2021, thus bringing the incidence of gross non-performing loans to 1.7% and net to 1, 0% considering the other disposals planned for this year (already subject to provisions in the fourth quarter of 2021) and applying the EBA methodology. Our capital structure remains extremely solid and far exceeds regulatory requirements with a fullly phased CET1 ratio of 12.5%, fully deducting the 3.4 billion buy back approved by the ECB and not considering 1 in our capital ratios. 65 billion euros of dividends accrued in the half-year, of which at least 1.1 billion to be paid as an interim dividend in November “.