Italy's Intesa lifts full year profit outlook as it prepares to launch MPS bid

Intesa Sanpaolo Ups Full-Year Profit Forecast as MPS Takeover Launches

Intesa Sanpaolo's Financial Performance and MPS Acquisition

Strong Earnings and Upgraded Profit Outlook

MILAN, Nov 3 (Reuters) - Italy's biggest bank Intesa Sanpaolo on Tuesday posted solid earnings and improved its full-year outlook ahead of launching its buyout offer for rival Monte dei Paschi di Siena.

Intesa now sees a 2026 net profit "well" above €10 billion ($11 billion), versus an earlier forecast of a full-year result above that figure, despite a €900 million hit on 2026 earnings from Italy's budget law for next year, which has hiked taxes on banks.

Income Growth Projections

Intesa also forecast a "significant" increase in income derived from the gap between lending and deposit rates in 2027. 

Shareholder Returns

It said it will pay out 95% of this year's profit to investors, three quarters via cash dividends and 20% in the form of a share buyback. 

Quarterly Results and Cost Management

Net Profit and Revenue

Net profit in the July-September period totalled €2.65 billion compared with a €2.50 billion average analyst forecast in an LSEG consensus.

With revenue in the quarter matching analyst expectations at €7 billion, Intesa kept a lid on costs which were flat quarter-on-quarter and declined by 2.5% from a year before.

Cost-Saving Strategies

With the bulk of its business in Italy, where an ageing and fast-shrinking population hinders economic growth, Intesa has been targeting cost savings through technology but also domestic acquisitions such as the MPS deal.

MPS Takeover Details

Shareholder Approval and Regulatory Review

After persuading MPS's shareholders to reject the bank's defence strategy with a sweetener and a warning it would walk away, Intesa is awaiting approval early next week from Italy's markets watchdog of its €33-billion share-and-cash bid for the Tuscan lender.

Tender Offer Timeline

The offer's tender phase is expected to kick off in three weeks.

Revised Exchange Ratio

Intesa said it would give MPS shareholders 1.664 new Intesa shares for each MPS share tendered, revising an earlier exchange ratio of 1.6 to take into account the interim dividend it said it would pay in November.

Currency Exchange Rate

($1 = 0.8937 euros)

Reporting Credits

(Reporting by Valentina Za, editing by Alvise Armellini and Keith Weir)