Intesa Sanpaolo 2017 Results Beat Expectations, NPLs to Halve by 2021 -- Earnings Review
By Pietro Lombardi
Intesa Sanpaolo SpA (ISP.MI) presented its 2017 results and a new business plan on Tuesday morning. Here are some highlights:
PROFIT: Intesa Sanpaolo's fourth-quarter and 2017 net profit increased significantly, beating expectations. For 2017, the lender's net profit was 7.32 billion euros ($9.1 billion), up from EUR3.11 billion. Results were boosted by a cash contribution from the Italian government related to the rescue of two regional banks, and a 4Q gain from the sale of its stake in Allfunds. Analysts had expected Intesa to report net profit of 7.08 billion euros for the year.
OPERATING INCOME: Intesa's 2017 operating income of EUR17.44 billion came in above analysts' expectations of EUR17.09 billion.
WHAT WE WATCHED
NPLs: Fourth-quarter loan loss provisions increased 4.7% to EUR1.23 billion. In the third quarter, the figure was EUR646 million. This compares with Credit Suisse's expectations of EUR1.28 billion loan loss provisions for the fourth quarter.
BUSINESS PLAN: Intesa unveiled its 2018-2021 business plan, which foresees significant derisking "at no extraordinary cost to shareholders," cost reduction and revenue growth. The bank pledged to cut non-performing loans, or NPLs, by about half by 2021. It also said its targets for 2021 include net income of up to EUR6 billion, return on equity of 12.4% and operating income of up to EUR20.8 billion.
DIVIDEND: Intesa confirmed it would pay out EUR3.4 billion in dividends for 2017. The bank's new plan targets a payout ratio of 85% for 2018, 80% for 2019, 75% for 2020 and 70% for 2021. The new business plan looks "very generous in terms of dividend policy," analysts at Kepler Cheuvreux said.
Write to Pietro Lombardi at firstname.lastname@example.org
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February 06, 2018 08:05 ET (13:05 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.