Published by Global Banking and Finance Review
Posted on February 4, 2025
By Valentina Za
MILAN (Reuters) -Italy's biggest bank Intesa Sanpaolo strengthened its profit outlook on Tuesday, forecasting rising revenue and lower costs this year, after incentives for early staff exits weighed on fourth quarter income.
Intesa, which kicked off the reporting season for Italian lenders, is keeping out of the consolidation wave gripping the sector due to antitrust reasons which limit any further domestic expansion after it bought smaller rival UBI in 2020.
Intesa also rescued two regional banks in 2017, and CEO Carlo Messina has said cross-border deals would require a different regulatory backdrop.
Analysts at KBW said the quarter was a typical one for the lender, "delivering where it matters" with the net interest margin resilient and net fees above expectations.
Intesa, which at the end of each year decides on additional shareholder rewards on top of its 70% cash payout ratio, said its board had approved a 2-billion-euro ($2.1 billion) share buyback out of 2024 earnings, that will start in June.
The previous buyback totalled 1.7 billion euros.
Net income this year will be well above 9 billion euros, Intesa said, improving its earlier guidance for a 2025 net profit of around 9 billion. That compares with 8.7 billion euros in 2024, which was Intesa's best-ever annual result.
"Outlook reads well, at first glance, but just marginally better than consensus," the KBW analysts said in a note.
Net income for the October-December period amounted to 1.5 billion euros, broadly in line with an analyst consensus forecast in a Reuters poll, and down 6% year-on-year.
Revenues totalled 6.67 billion euros, better than the 6.54 billion expected by analysts, with net fees strengthening, while net interest income declined versus a year before.
With interest rates falling after fuelling record profits, banks are focusing on net fees, which Intesa reaps from in-house wealth management and insurance operations. Net fees rose 14%.
With 2,350 employees close to retirement leaving the group, on a voluntary basis, this year, Intesa said it would cut operating costs in 2025, including by reducing its real estate footprint.
Intesa, which in September 2023 secured a presidential decree to sever ties with its Russian business but is yet to complete the exit, booked a 96 million euro hit for Russia and Ukraine, mostly to offset the net income contribution from the Russian unit. ($1 = 0.9686 euros)
(Reporting by Valentina Za;Editing by Keith Weir and Emelia Sithole-Matarise)
