The Italian banking group recorded better than expected net profit in the second quarter. The action climbs.
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The Italian bank Intesa Sanpaolo, which will swallow its counterpart Ubi Banca, has confirmed its 2020 and 2021 objectives after recording better than expected results in the second quarter, despite the context troubled by the pandemic.
At the Milan Stock Exchange, investors welcomed these announcements. Around 11:30 am GMT, the title gained 4.14% to 1.78 euros, in a market up 0.87%.
The bank’s quarterly net profit rose 16.3% to 1.4 billion euros, compared to 1.08 billion expected by analysts, according to the consensus of financial information provider Factset Estimates.
Over the half-year, it grew 13.2% to 2.56 billion euros.
As a result, the bank confirmed its targets – revised downward in early May. Intesa Sanpaolo estimates that her net profit excluding Ubi Banca will be no less than 3 billion euros this year and no less than 3.5 billion euros in 2021.
She stresses that the 2.56 billion achieved in the first half of the year already represent 86% of its target for 2020.
“In a very difficult environment”, Intesa Sanpaolo achieved “her best net profit since the first half of 2008”, welcomed her boss Carlo Messina.
Last year, the bank recorded a 3.3% increase in its net profit, to 4.18 billion euros, which was then its best result since its birth in 2007.
“The results of the first half of the year confirm Intesa Sanpaolo’s ability to effectively face the complex context linked to the Covid-19 epidemic, reflecting its sustainable profitability”, the bank commented in a press release, highlighting the diversity of its model activity and its solidity in terms of capital.
“The generation of sustainable value for all stakeholders will be strengthened by the union with Ubi Banca”, she added.
“Thanks to this transaction, we are positioning ourselves in the very first positions among banks in the euro zone: we become the second bank by capitalization, the sixth by operating profit and eighth by total assets. This is a very important step ”, noted Mr. Messina.
Intesa Sanpaolo successfully carried out a public purchase and exchange offer (OPA / OPE) targeting its counterpart Ubi Banca, obtaining more than 90% of the capital.
Intesa Sanpaolo will have to sell some 500 branches after having swallowed Ubi Banca to meet the requirements of the competition authority in Italy.
The resulting group will be sitting on a treasure trove of some 1.1 trillion euros in client assets and aims for a net profit of at least 5 billion euros in 2022.
Intesa Sanpaolo claimed to have significant competitive advantages in the new context, with a strong position in asset management, an offer developed online and more than 60,000 employees working from home out of some 88,000 employees.
The bank’s common equity ratio, an index that measures its ability to cope with a crisis, stood at 14.9% at the end of June against 14.5% at the end of March and against 14.1 % at the end of December, a very high level.
The quality of its loans continued to improve. Its stock of gross deteriorated loans fell by 4.6% compared to the end of 2019. The group boasts of having reached 90% of the target set in its 2018-2021 plan in this area.
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