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Intesa SanPaolo preview on accounts. ECB effect

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Intesa SanPaolo preview on accounts.  ECB effect

Intesa SanPaolo awaited at the gates of the markets, with the publication of the quarterly which will take place on Friday 3 February. Equita SIM has published the preview on the accounts of the Italian bank led by CEO Carlo Messina, who reassured shareholders just a few days ago regarding its capital solidity and commitment to dividends. The Milan SIM highlights the positive effect that the ECB’s rate hike will have on the institution’s profitability: an assist that will also be seen in the results of its rival UniCredit.

“We expect 4Q22 to show a marked acceleration in terms of the NII (interest margin) which will benefit from the significant rise in interest rates, against a cost of funding which in the last quarter – as highlighted
even from the latest ABI data – it should have shown only a slight increase”.


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Equita continues, writing in the note that “on the other hand, we don’t expect a particularly brilliant quarter for the
commissions, substantially flat on a quarterly basis and decreasing on an annual basis mainly due to the absence of performance fees due to the performance of the financial markets”.

And again: “Under the operating line, although we expect a substantially stable cost of the underlying risk, we assume an increase in provisions both in the light of the activity undertaken by the bank in order to optimize RWAs, and in order to minimize the possible impacts of a worsening of the macro scenario on 2023. Consequently we assume a 4Q22 CoR in
area 100bps”.

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In detail for the fourth quarter Equita SIM estimates:

  • NII (net interest margin): 2.6 billion (+9% QoQ, +33% YoY)
  • Total revenues: 5.3 billion (+7% QoQ, +7% YoY)
  • Operating Profit: 2.3 billion (+16% year-on-year)
  • LLPs (Loan loss provision): 1.2 billion (103 basis points)
  • Net Income: 0.8bn

Following our fourth quarter estimates, we revise the outlook on 2022E net profit from 4.5 billion to 4.1 billion (mainly due to more conservative assumptions on the CoR front – cost of risk), while remaining consistent with the 2022 profit guidance more than 4 billion.

Instead, we essentially confirm the estimates for 2023-24 (Net income – net profit – at 5.5 and 6.3 billion respectively).

As reported in the press release published on Saturday, Intesa SanPaolo’s CET1 – after the actions aimed at reducing RWAs – is expected for the year to be around 13%, including the impact of the 1.7 billion buyback (4% of the market capitalization) on the launch of which we believe the BoD will decide favourably.

Equita SIM concluded the note by noting that “the stock trades with a 2023E P/TE = 0.9x against a ROTE > 12%”.

The Intesa SanPaolo share on the Ftse Mib of Piazza Affari. Intesa was confirmed as queen of the Stock Exchange on the eve thanks to the clarifications on CET1 and dividends, which arrived after the diffusion of some rumors that had cast shadows on the bank’s future.

Analysts reaffirmed their confidence in the bank with Citi who, according to what was reported by the Radiocor-Il Sole 24 Ore news agency, expressed themselves as follows:

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“We believe the group is adequately capitalized and we expect the buyback to take place in the course of 2023, given that management has indicated that the main factors that could stop it are related to macro developments.

For their part, UBS wrote that the doubts about the assets and the buyback of the institute led by Carlo Messina are “a cloud in a scenario that is otherwise improving”, in the wake of interest rate hikes by the ECB.

In this regard, it is worth recalling the opinion that S&P Global Ratings expressed towards Italian banks a few days ago.

S&P Global Ratings remarked that it has a stable outlook on Italian banks, forecasting a solid year 2022 in terms of profits, unless the same banks decide during the fourth quarter to provide for an increase in provisions to deal with those credit losses that could be suffered if the hypothesis of a recession were confirmed.

And it is appropriate to say that the announcements on provisions arrived from the US front, with the quarterly reports of JP Morgan & Co last week and yesterday with the accounts of Goldman Sachs, clearly highlighting how the Big Banks made in the US are preparing to the likelihood of a recession by setting aside more reserves, thus fearing a growth in non-performing loans-NPLs.

S&P said it remains confident in Italian banks even in a worst-case scenario involving a recession.
The ECB effect was mentioned with the positive impact of the tightening on the interest margin. An impact that should more than offset the potential impact of a possible mild recession on provisions, which could increase to meet the specter of new NPLs.

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Returning to Intesa SanPaolo, it is worth mentioning that the bank has reiterated several times that the creation and distribution of value remain a priority

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