Italy's Intesa Moves to Boost Future Profits After Strong Quarter

Intesa Sanpaolo Reports Strong Quarterly Earnings and Future Profit Plans

Intesa Sanpaolo's Financial Performance and Strategy

By Valentina Za

Quarterly Earnings Overview

MILAN (Reuters) - Italy's biggest bank Intesa Sanpaolo beat quarterly earnings forecasts on Wednesday, defying lower interest rates, and said it would use profits in excess of its 2025 goal to fund one-off measures later this year to boost future performance.

Future Profit Strategies

Intesa said it was keeping its full-year profit outlook unchanged, despite the one-off costs that CEO Carlo Messina said would likely be "significant" and could include writing off parts of its IT system as the bank adopts a cloud-based infrastructure.

Market Position and M&A Activity

Intesa is also likely to fund voluntary staff departures after investing to digitise its business, shutting down some 1,300 branches over the past three years.

Shares extended gains after the results to close up 4.4%.

Intesa reported a second quarter profit of 2.6 billion euros ($3.0 billion), above a 2.4 billion euro Visible Alpha consensus forecast. Revenues also topped expectations at 7 billion euros.

The net interest margin (NIM), which tracks income from the gap between lending and deposit rates, rose 5% quarter-on-quarter despite declining interest rates, while net fees were broadly flat and trading income improved.

Analysts welcomed the surprise NIM rise and the forecast of a broader recovery in the margin in 2026 thanks to Intesa's hedging strategy on interest rates. The bank also guided for strong gains from its trading activity in the full year.

It confirmed its 2025 profit would be well above 9 billion euros, including the fourth-quarter charges.

Messina said Intesa was determined to keep out of the "crazy" M&A activity gripping Italian banking, where a dozen takeover bids have been announced since November.

"It's a Far West: I don't like what's happening in the country," he said, adding Intesa had taken advantage of the chaos to poach private bankers and wealth managers from rivals and would continue to do so this quarter.

With a business model geared towards wealth management and insurance fees, Intesa is better placed than many rivals to contend with lower rates, which Messina has said are the main driver of the M&A frenzy.

An early mover in the consolidation wave thanks to its 2021 acquisition of rival UBI, Intesa faces antitrust limits in its domestic market, of which it controls around one fifth.

($1 = 0.8667 euros)

(Reporting by Valentina Za. Editing by Keith Weir and Mark Potter)