Intesa Sanpaolo Earnings: Impressive Revenue Growth, Realized Efficiencies; Valuation Up 17%

Intesa Sanpaolo's first quarter of 2024 was one of its best quarters, with an impressive 21% EPS growth and the industry-lowest cost/income ratio of 38%. We raise our fair value estimate by 17% to EUR 3.50 per share from EUR 3.00 per share as we anticipate higher fee income growth than previously and structural improvements in cost management. Intesa’s digital investment (around EUR 3 billion over the past two years) is starting to bear fruit, supporting fee income expansion and efficiency gains. In response, we have decreased our short-term and midcycle efficiency ratio by 3% and incorporated 10% growth in fee and commission income for 2024. These changes are the main drivers of our fair value increase.