Intesa Sanpaolo cements reputation as a top European bank

Intesa Sanpaolo is on course to meet its target of achieving a higher net income than in 2018. In its first quarter results for 2019, the Italian banking group posted a net income of €1.2 billion, excluding contributions towards supporting the banking system. With those costs, the figure was €1.05bn. “We are particularly satisfied with the first quarter of the year, despite a more challenging operating environment than expected,” said CEO Carlo Messina.

The bank’s cost-income ratio fell to 50.5 per cent, placing it among the top European banks for efficiency. It confirmed an 80 per cent payout ratio for shareholders, in line with its commitment to pay a significant dividend. Potential bad loans were reduced by €15 billion over the past 12 months. “Since the 2015 peak, we have reduced the stock by €29 billion,” Messina said. “We achieved this significant result at no cost to our shareholders.”

In the first quarter of 2019, the bank continued to promote growth in Italy’s real economy, advancing €10.5 billion in medium and long-term credit to households and businesses, with about €9 billion going to households and SMEs. It has helped some 5,000 struggling companies to return to financial health. Since 2014 it has assisted 100,000 companies, saving about 500,000 jobs.

As one of the most profitable banks in Europe, Intesa Sanpaolo says it wants to be an engine for Italy's social economy, promoting economic inclusion and relieving poverty.“To support the most needy, we have launched major projects and partnerships for the distribution of meals, beds, medicines and clothing,” Messina said.

The bank showed its commitment to sustainability by supporting the Circular Economy initiative, making available €5 billion in credit. More than €300m has already been spent on supporting the project’s first 13 initiatives.

The first phase of the bank’s Impact Fund paid out €130,000 in unsecured loans to Italy’s 1.6 million university students in the first month.“[We are] convinced that investment in education is a key element for the country’s growth,” Messina said. “We have partnered with Generation, a global project to reduce youth unemployment, in which we are committed to training and introducing 5,000 young people to the Italian workforce.“The dividends that we distribute to our shareholder banking foundations represent more than half of the total charitable funds donated by all such Italian banking foundations.”On the cultural front, about 200,000 people visited the “Romanticism" exhibition at the bank’s Gallerie d’Italia museum in Milan, making it one of the most successful in Italy.

The results showed a 30.8 per cent increase in gross income, operating margin up by 33.5 per cent, operating income up 4.6 per cent and operating costs compared with the final quarter of 2018 down by 13.9 per cent.The bank reported a solid capital position, well above regulatory requirements.

After deducting €840m accrued dividends, its common equity tier 1 capital ratio stood at 13.5 per cent – one of the highest levels among major European banks.Messina added: “We are very pleased with this result which we achieved while carrying out significant investment programmes in digital, wealth management and employee training.”

photo credits: Andrea Cappello