First half 2021 results: highlights and statement by CEO Carlo Messina

First half 2021 results: highlights and statement by CEO Carlo Messina. Intesa Sanpaolo beats expectations in Q2: excellent results perfectly in line with the goal of achieving a minimum net profit of €4 bn within 2021

Intesa Sanpaolo’s first-half financial results once again demonstrated the resilience of the Group’s business model focused on wealth management and protection. Net income of €3 billion marked the best first-half result since 2008. This performance led to improved guidance for a full-year Net income of minimum €4 billion.

The first-half results also underlined Intesa Sanpaolo’s solid capital base. The recent stress tests conducted by the EBA confirmed that Intesa Sanpaolo is a low-risk bank, and that the Group’s capital position remains well above regulatory requirements, even in a very adverse macroeconomic scenario for Italy.

Thanks to this solid performance, Intesa Sanpaolo has remained a source of support for the real economy and a reference point in terms of sustainability and social and cultural responsibility for Italy.

The Group confirmed its dividend policy for 2020 and 2021, with cash dividends totaling €4 billion to be distributed to shareholders this year, including an interim dividend to be paid in November.

Below are some highlights from the results achieved during the first six months of 2021 as well as a statement by Intesa Sanpaolo CEO Carlo Messina.

  • €3 bn Net income (+17.8% % vs 1H20), the best half since 2008
  • Best second-quarter Net income ever, at €1.5 bn
  • Highest-ever Operating income thanks to the best-ever first-half Commissions (+13.2% vs 1H20)
  • A Wealth Management and Protection Company with €1.2 trillion in Customer financial assets
  • Sector-leading capital position, with a Common Equity ratio of 15.7%, well above regulatory requirements event in the EBA stress test adverse scenario
  • NPL stock and NPL ratio at lowest levels since 2007, con a Gross NPL ratio of 4.1% and a Net NPL ratio of 2.1%

In presenting Intesa Sanpaolo’s results for the first six months of 2021, I would like to renew my wish for 2021 to be the year in which we overcome the COVID-19 pandemic and enjoy strong recovery globally, in particular in Italy. GDP figures show that Italy is moving in the right direction. We must not, however, lose sight of the serious consequences of the health, social and economic emergency in terms of the spread of poverty and increased unemployment, particularly among women and the younger generation.

In order to even begin to approach the employment levels of the other large European countries, we must focus on the solid fundamentals of our economy: the great wealth of Italian families, equal to €10,900 billion, of which €4,800 billion is represented by financial assets; our manufacturing companies, with much more solid balance sheets compared to the levels before the 2008 crisis; the excellence of our exports, able to exceed German exports by more than 8 percentage points in the last 5 years.

The strong support deriving from the Government’s packages of measures and the great opportunity to redesign the production system represented by the National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza – PNRR), with its more than €200 billion focused in particular on investments in digital and in the environmental economy, are the foundations for giving life to a stronger economy, capable of sustaining stably higher levels of GDP growth than we are accustomed to.

We, as Intesa Sanpaolo, even in this delicate moment for Italy, are ready to be a point of reference for sustainable and inclusive growth thanks to the more than €400 billion of medium and long-term loans that we will make available to businesses and families over the PNRR period.

Intesa Sanpaolo will be able to play a strong role in driving the recovery of growth based on its levels of efficiency, profitability and solidity, which place us at the top of the sector in Europe.

This is demonstrated by the results of the recent EBA stress test: even in the adverse scenario our capitalisation is well above regulatory requirements, with a fully phased-in CET1 Ratio of 10% once the sale – which has already taken place – of the UBI branches to BPER and the neutralisation of the impact of the LECOIP long-term incentive scheme are taken into account.

At €3 billion, net income was the best H1 figure since 2008. It is a very significant result – which does not yet benefit from synergies resulting from the integration with UBI Banca estimated at over €1 billion – perfectly in line with the objective of a net result of at least €4 billion in 2021.

Net operating income is the highest ever (+1.7% vs H1 20) thanks to the best first half ever for Commissions (+13.2% vs H1 20)

The significant reduction in operating costs (-2.3% vs H1 20), the reduction of €1.6 billion in gross deteriorated loans in the first six months with the lowest flow of deteriorated loans in the first half ever, the stock of deteriorated loans and NPL ratio at the lowest level since 2007, the common equity ratio of 15.7%, well above regulatory requirements even in the adverse scenario of the EBA stress test, place us at the top of the sector allowing significant remuneration to our shareholders.

In addition to the €694 million cash dividend paid in May 2021, we expect a further distribution of €1.9 billion from reserves to be paid on 20 October 2021 and €1.4 billion to be paid, in the form of an interim dividend, on 24 November 2021.

Of the total €4 billion dividends paid out in 2021, approximately €1.5 billion are directly in favour of banking foundations – to support their inclusive action in support of the territory, social and cultural initiatives and people in difficulty – and in favour of households and individuals. In addition to this amount, there is the indirect benefit to the real economy resulting from the fact that most of our institutional investors, who benefit from dividends, manage the savings of households and individuals.

Since 2014, without taking into account the distributions planned for this autumn, we have distributed a total of €15 billion to our shareholders.

The strength of our balance sheet allows us to ensure a tangible impact on the economy and society: since 2014 there have been around 128,000 Italian businesses that we have supported on the path to return to performing status (approximately 5,000 in the first half of the year alone), suspensions on loans to households and businesses amounted to a value of €109 billion, loans disbursed with a state guarantee amounted to €29.5 billion, while those granted with a SACE guarantee amounted to around €10 billion. We will continue our efforts to reduce the socio-economic hardship caused by the pandemic by allocating €150 million, or 50% of our Fund for Impact, to new projects and initiatives.

Intesa Sanpaolo’s ability to achieve and exceed its objectives, even in a period of exceptional complexity, is due to the professional quality of its people, and we are counting on their contribution in the preparation of the 2022-25 Business Plan that we will present next February and which will see the confirmation of Intesa Sanpaolo as a driver of sustainable and inclusive growth, thanks to the deep roots of the local bank in the Italian economy, the solidity of the IMI C&IB Division and the uniqueness of the “Wealth Management and Protection Company” business model. The Foreign Banks will focus on being increasingly leaders in the countries in which they operate, particularly where they have significant market shares. Sustainability will be confirmed as a strategic element. Human Capital will remain one of the keys to our success. Of particular importance will be fintech and investment in digital. The measures to be put in place for the implementation of the PNRR will play a central role, with an increasing focus on ESG, green, digital, inclusive growth, health and the new generations.