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

• €1.5bn Net income (+32% vs 1Q20), the best quarter since 2008
• €2.6bn Gross income (+22% vs 1Q20), the best quarter ever
• Insurance income up 17% vs 4Q20, with non-motor P&C revenues up 27%
• Best Q1 ever for Commissions (+9% vs 1Q20)
• Strong decrease in Operating costs (-2.6% vs 1Q20)
• Cost of risk down to 35bps coupled with the lowest-ever Gross NPL inflows
• Lowest NPL stock and NPL ratios since 2007
• Common Equity ratio up at 15.7%

"In presenting Intesa Sanpaolo's first quarter 2021 results, I would like to renew my hope that 2021 is the year in which we move past the pandemic and see strong economic recovery, especially in Italy. Our country was hit hard by the health and social emergencies, with a significant increase in poverty and in unemployment, particularly for women and young people.

"To close the gap in terms of employment levels versus other large European countries, we must focus on the solid fundamentals of our economy: the high wealth of Italian households, equal to €10.7 trillion, of which €4.4 trillion are in financial assets; our manufacturing companies, whose balance sheets are much more solid than before the 2008 crisis; and the excellence of our exports, which in the past five years surpassed those of Germany by more than four percentage points.

"Strong support from the Italian government's economic measures and the National Recovery and Resilience Plan – a great opportunity to redesign industry, with over €200 billion focused on investments in the digital and green economies – are the basis for a stronger economy, one that can sustainably maintain GDP growth levels that are higher than we are used to.

"As Intesa Sanpaolo, we are ready in this delicate moment for Italy to be a driver of sustainable and inclusive growth, thanks in part to the over €400 billion of medium- and long-term lending that we will provide to businesses and households in support of the Recovery Plan.

"The driving role that Intesa Sanpaolo will play in the return to growth is based on the Group’s standards of efficiency, profitability and solidity, which rank us at the top of the European banking sector.

"Net income for the first quarter was €1.5 billion euros, up 32% compared to the first quarter of 2020. There was a strong acceleration in Operating income and Operating margin, up 9% and 38% respectively versus 1Q20.

"Insurance income grew 17% versus the last quarter of 2020, while we had the best first quarter ever for Commissions. Client financial assets – the driving force of our wealth management engine – increased in the quarter by around €13 billion, reaching a total of €1.2 trillion.

"Thanks to the significant reduction in operating costs (down 2.6% versus the first quarter of 2020), our efficiency improved further with a cost/income ratio of 46.5%, one of the best in Europe.

"Our digital offering continues to lead thanks to our app (recognized as one of the best in Europe for functionality), with 11.6 million multichannel customers and distinctive relationship tools for SMEs and Corporates.

"The cost of risk dropped to 35 basis points. In the first three months of the year, the flow of gross impaired loans fell to the lowest-ever on a quarterly basis. Last year, we beat our target for the reduction of impaired loans, set out in our 2018-2021 Business Plan, by €6 billion and by one year in advance. At the end of March, we reached a gross NPL ratio of 4.4% (3.5% according to the EBA definition), and a net NPL ratio of 2.3% - the lowest NPL ratios since 2007.

"The Common Equity ratio rose to 15.7%, taking our capitalization, already very solid, to even higher levels.

"The UBI Banca integration process ended perfectly in line with our plans, despite the higher-than-expected operational complexity due to COVID; the key to success was the involvement of UBI’s people, combined with the managerial skills present in Intesa Sanpaolo. Synergies from the combination with UBI – expected to be more than €1 billion per year – will add significant value to our position as a European leader.

"The remuneration of our shareholders remains a priority. In May, we will distribute some €700 million in cash dividends, the maximum amount established by the Supervisor. Once the ECB lifts restrictions, we will seek permission to deliver the equivalent to reach the total of 75% payout for 2020 through additional cash distribution from reserves. We confirm the commitment to a payout ratio of 70% from 2021 Net income – expected to be well above €3.5 billion – to be paid partially through an interim dividend later this year, pending ECB approval.

"The strength of our balance sheet enables us to make a concrete contribution to the economy and society. Since 2014, we have supported around 126,000 Italian companies to get back on track (around 2,900 in the first quarter of this year alone). The value of mortgage and loan payment suspension for households and businesses reached €101 billion. Loans granted with a state guarantee totaled €28 billion, while those granted with SACE guarantees reached around €10 billion.

"We will continue with our actions aimed at reducing the socio-economic hardship caused by the pandemic by allocating €150 million from our Fund for Impact (equal to 50% of the fund) to new projects and initiatives.

"Intesa Sanpaolo's ability to meet and exceed its targets, even in this period of exceptional complexity, is due to the professional quality of its people; my personal thanks go to them. In a period of extraordinary difficulties, we successfully completed the integration of UBI and we achieved significantly positive results. Thanks to our People and to these achievements, our Bank will continue in its role as an engine of inclusive and sustainable growth".