Intesa Sanpaolo says its net profit jumped 16% in the second quarter

Intesa Sanpaolo says its net profit jumped 16% in the second quarter
Written by:
Wajeeh Khan
4th August, 14:19
Updated: 4th August, 14:20
  • Intesa Sanpaolo says its net profit jumped 16% in the second quarter.
  • The Italian banking group wishes to reinstate dividend in 2021.
  • Intesa Sanpaolo has recently sealed its takeover agreement with UBI.

Intesa Sanpaolo (BIT: ISP) expressed plans of boosting dividend payments on Tuesday as its profit for the fiscal second quarter came in stronger than expected. Intesa has recently sealed its takeover agreement with UBI.

Shares of the bank are currently about 4% up Tuesday. At £1.61 per share, Intesa Sanpaolo is roughly 25% down year to date in the stock market after recovering from an even lower £1.20 per share in the first week of April. At the time of writing, Intesa Sanpaolo has a market cap of £28.17 billion and a price to earnings ratio of 7.15.

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The merged group targets £4.51 billion of profit by 2022

The merged group (Intesa and UBI) that marks the 8th largest European bank by assets, now targets £4.51 billion of profit by 2022. Its peer, Deutsche Bank, also published its earnings report last week.

Without UBI’s contribution, Intesa Sanpaolo forecasts a minimum of £2.71 billion of profit in 2020 and a higher £3.16 billion in 2021.

In the second quarter, the Italian banking group generated a net profit of £1.26 billion that represents a 16% growth on a year over year basis. Experts had anticipated a lower £990 million of net profit for Intesa in Q2.

Intesa offloaded its retailers’ payments business in the recent quarter to Nexi that resulted in a £990 million of boost to its capital that contributed to its hawkish quarterly earnings. The capital gain, as per Intesa, was directed at writing down £1.26 billion of loans to cushion the economic blow from COVID-19.

Intesa Sanpaolo wishes to reinstate dividend in 2021

Earlier this year, the European Central Bank had recommended regional banks to suspend dividends in a bid to shore up finances amidst the Coronavirus pandemic. Following an upbeat performance in the quarter that concluded in June, Intesa said that it will now request ECB to allow it to reinstate dividend payments in 2021. The Turin-headquartered bank wishes to return part of its combined net income in 2019 and 2020 to its shareholders as dividend payouts.  

Intesa also highlighted in its report on Tuesday that its core capital jumped further from 14.5% in Q1 to 14.9% in Q2. In terms of revenue, the company registered £3.70 billion that came in line with the experts’ forecast.

According to the Italian banking group, its net interest income saw a marginal decline on a year over year basis, but fees tanked 11% in the fiscal second quarter.

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