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Full year 2020 results: statement by CEO Carlo Messina

Resilient profitability, balance sheet further strengthened through NPL deleveraging and additional value creation from the combination with UBI Banca

In 2020, despite despite an extremely complex environment, Intesa Sanpaolo delivered a solid performance exceeding €3 billion Net income targeted for 2020.

During the health emergency, Intesa Sanpaolo supported people in need and the real economy of Italy to protect employment and maintain liquidity flows between production sectors.

Today, 5th February 2021, the CEO of Intesa Sanpaolo Carlo Messina comments on the financial statements: “My hope for 2021 is that it will be the year in which we move past the pandemic, see economic recovery and fight against social emergencies. As Intesa Sanpaolo, we are ready to be a reference point for sustainable and inclusive growth”.

Commenting on today’s financial results, the CEO of Intesa Sanpaolo Carlo Messina said:

“In 2020, the entire world was overcome by the COVID-19 pandemic. Italy was hit particularly hard, triggering an extraordinary crisis that has affected our families, businesses and broader society.

“My hope for 2021 is that it will be the year in which we move past the pandemic, see economic recovery and fight against social emergencies. As Intesa Sanpaolo, we are ready to be a reference point for sustainable and inclusive growth.

“During the health emergency, Intesa Sanpaolo donated €120 million to strengthen the national health system. Our support in recent years for people in need has exceeded 17 million meals, beds, medicines and items of clothing.

“Our role in supporting the country also manifested itself through our contribution to the real economy, made concrete by the €50 billion in credit extended to families and businesses, thus protecting jobs and maintaining liquidity in the productive sectors.

“We were the first to provide loan and mortgage moratoria; during these months, we granted a total of €95 billion. We also provided state-guaranteed loans for a total of €35 billion.

“The measures we put in place also include innovative financing tools, such as impact loans that support local business communities.

“Our role as an engine of growth at the service of households, businesses and broader society is enabled by the Bank's ability to maintain resilient profitability over time, together with increasing efficiency and one of the highest capital strengths in European banking.

“Against this extraordinarily complex backdrop, in 2020 we exceeded our target achieving a stand-alone net income of €3.1 billion, when excluding the accounting impact of the combination with UBI Banca, the goodwill impairment related to Banca dei Territori, and the five-month contribution from UBI Banca's activities. Adding the five-month contribution from UBI Banca, the normalized net income reaches €3.5 billion, excluding the accounting impact from the combination with UBI Banca and the impairment of goodwill.

“In 2020, we achieved the best result ever in the insurance sector, with revenues from the non-motor P&C business growing to €500 million. Commissions showed a significant recovery in the second half and particularly in the fourth quarter. The interest margin for the year returned to growth after five consecutive years of decline. Costs in 2020 declined 3%. Operating efficiency is particularly high, with a cost/income ratio of 52%.

“Synergies from the combination with UBI Banca are expected to be over €1 billion per year when fully operational, exceeding initial estimates. The integration process is perfectly in line with the plan and the involvement of people arriving from UBI is proceeding successfully.

“The cost of risk, excluding provisions for future impact from the pandemic, dropped to 50 basis points. In the fourth quarter, we further accelerated the reduction of the stock of non-performing loans; in 2020 this amounted to €10.8 billion. Thanks to this, we beat the 2018-2021 Business Plan target for reducing impaired loans one year in advance, and we reached the lowest NPL ratio since 2007, with a gross NPL ratio of 3.7% – including UBI Banca and applying the EBA definition – and a net NPL ratio of 2.3% including UBI Banca.

“The common equity ratio increased to 15.4%. Considering the reduction in RWA due to the sale of branches to BPER bank, it stands at 15.9% pro forma.

“To achieve new important milestones in the coming years, we have allocated over €6 billion of 2020 pre-tax profit to further strengthen the sustainability of our results, allocating: €2.2 billion to provisions for future impact from the pandemic, €2.1 billion for additional provisions on UBI Banca's impaired and performing loans, and €2 billion for integration costs.

“We will face the challenges ahead with the strength of our Wealth Management and Protection Company business model, backed by the more than €1.2 trillion that Italians entrust to us. We have distinctive capabilities in proactive credit management, accompanied by strategic partnerships with industry leaders in the sector. Our digital offer has reached the remarkable numbers of over 12 million multichannel customers and over 7 million customers using our apps.

“The remuneration of our shareholders remains a priority: in May, we intend to distribute cash dividends of €700 million, the maximum amount established by the Supervisor. Once ECB restrictions are removed, we will ask for authorization to distribute the remaining part of the expected payout ratio – equal to a total of 75% of the €3.5 billion normalized net profit for 2020 – as cash from reserves. We confirm our commitment to pay dividends equaling a 70% payout ratio of 2021 net income, partially through an interim dividend this year, subject to the approval of the ECB and the Extraordinary Shareholders' Meeting.

 

“Intesa Sanpaolo's ability to meet and exceed its objectives, even in a period of exceptional complexity, is due to the professional quality of its people. My personal thanks go to them, for how they have supported families and businesses with extraordinary credit measures and for the continuous attention paid to the management of our customers' savings. The significantly positive results obtained enable our Bank to continue in its role as an engine of inclusive and sustainable growth”.

 

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