Core Viewpoint - Intesa Sanpaolo, Italy's largest bank by assets, is on track for another exceptional year with robust earnings and a nearly 60% year-to-date stock return in USD terms, including dividends [1]. Financial Performance - The bank's earnings remain incredibly strong, contributing to its positive stock performance [1]. Investment Perspective - The investment approach favored is long-term, buy-and-hold, focusing on stocks that can sustainably deliver high-quality earnings, particularly in the dividend and income sectors [1].

Financial Data and Key Indicators Changes - The company reported a net income of €7.2 billion for the first nine months of 2024, with €2.4 billion generated in Q3, reflecting strong growth in commissions and insurance income [5][6] - Earnings per share increased by 20% year-on-year, and the company confirmed a net income guidance of above €8.5 billion for the year, raising the guidance for next year to around €9 billion [6][15] - The common equity ratio improved to 13.9%, with a significant increase of 70 basis points since the beginning of the year [16][24] Business Line Data and Key Indicators Changes - Commissions increased by double digits in Q3, supported by positive net inflows in assets under management [12][19] - Insurance income reached a record high, with property and casualty contributions increasing by 10% quarter-on-quarter [19][91] - The Wealth Management & Protection businesses contributed significantly to profitability, with commissions from management and consultancy activities up 12% year-on-year [19][20] Market Data and Key Indicators Changes - Customer financial assets rose by €135 billion year-on-year, with €25 billion added in Q3 alone [18] - The gross non-performing loan (NPL) stock decreased by €900 million year-on-year, with NPL inflow remaining at historical lows [22][23] - The Italian economy is showing resilience, with GDP growth expected to outperform the Eurozone average [25] Company Strategy and Development Direction - The company is focusing on technology investments, having deployed €3.5 billion so far, with plans for an additional €1.5 billion in 2025 [7][36] - A significant workforce reduction of 9,000 employees is planned, with a focus on hiring 3,500 young people for wealth management and protection activities [9][36] - The company aims to leverage its strong position against fintech challengers and maintain a leading role in the market [10][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a net income of around €9 billion for next year, supported by revenue growth and cost reduction strategies [28] - The company anticipates a positive trend in net interest income despite a projected decline in Euribor rates, with expectations of maintaining strong performance [45][46] - Management highlighted the importance of internal synergies and cost reduction without the need for acquisitions, emphasizing a unique position compared to competitors [38][110] Other Important Information - The company plans to return €7.5 billion to shareholders this year, with a dividend yield of 10% [7][29] - The company is committed to maintaining a strong capital position while exploring opportunities for share buybacks [41][47] Q&A Session Summary Question: Cost and Use of Capital - The management discussed ongoing cost reduction strategies and the potential for significant buybacks, emphasizing the importance of technology investments for future efficiency [32][41] Question: Capital Distribution and Growth Opportunities - Management confirmed the potential for distributing more than 100% of profits and highlighted the focus on organic growth in wealth management rather than acquisitions [44][50] Question: Loan Growth and Economic Outlook - Management expects low single-digit growth in loans, driven by positive cash flow among Italian companies and government investments [78][81] Question: Insurance Income and Trading Gains - Management explained the recent decline in insurance income was due to life insurance trends but expects a positive turnaround, while trading gains are anticipated to offset net interest income declines [90][92] Question: Cost of Risk and NII Outlook - Management indicated a stable cost of risk around 30 basis points and provided insights into the expected decline in net interest income for Q4 [98][100] Question: M&A and Shareholder Returns - Management expressed limited appetite for M&A due to antitrust concerns and indicated a preference for share buybacks over increasing cash dividends [109][110]

MILAN, Oct. 31, 2024 (GLOBE NEWSWIRE) -- Intesa Sanpaolo posted record-breaking results for the first nine months of 2024, with net income reaching €7.2 billion, a 17% increase over the previous year.  Read excerpts from CEO Carlo Messina’s remarks highlighting Intesa Sanpaolo’s unique strengths, including its strategic investments in digital transformation, which position Intesa Sanpaolo for sustained growth.  “The results of the first nine months of 2024 reaffirmed Intesa Sanpaolo’s position as a Europea ...

A strong bank for a sustainable world 9M24 Results The best nine months ever with €7.2bn Net income Best-in-class Wealth Management, Protection & Advisory, accelerating our tech transformation October 31, 2024 MIL-BVA362-03032014-90141/VR 9M24 results: key achievements | --- | --- | --- | |---------------------------------------------------------|-----------------|-----------------------------------------------------------------------------------------------------| | Best-in-class profitability | €7.2bn | N ...

Group 1 - The focus is on long-term growth and dividend growth investing, emphasizing the importance of profitability over low valuation [1] - The analysis prioritizes margins, free cash flow stability and growth, and returns on invested capital as key metrics for evaluating companies [1] - The approach involves researching stocks within specific areas of competence, with a tendency to delve deeper into high-quality companies once identified [1]

Group 1 - Intesa Sanpaolo has been recognized as the world's leading bank in the FTSE Diversity & Inclusion Index – Top 100, ranking seventh globally among all companies and being the only Italian bank in the index [1][3] - The FTSE Russell analysis evaluated over 15,500 listed companies using 24 parameters across four categories: gender diversity, inclusion, people development, and controversies [2] - The recognition highlights Intesa Sanpaolo's commitment to diversity and inclusion as essential for growth, supported by continuous measurement and evaluation of results [3][5] Group 2 - Intesa Sanpaolo is the largest banking group in Italy, with over €422 billion in loans and €1.35 trillion in customer financial assets as of June 2024 [6] - The bank aims to provide €115 billion of Impact lending by 2025 to support communities and the green transition, alongside a €1.5 billion program from 2023 to 2027 to assist people in need [6] - The bank emphasizes the importance of human talent and invests in innovative programs to nurture inclusivity and diversity within its workforce [5][6]

Core Insights - Intesa Sanpaolo has been recognized as Europe's leading bank for relations with institutional investors and financial analysts, as well as for its Best ESG Program, according to the 2024 Extel survey [1][3] - Carlo Messina, CEO of Intesa Sanpaolo, has been named the Best CEO in the European banking sector for the seventh consecutive year, reflecting strong support from institutional investors and financial analysts [1][3] - The Board of Directors of Intesa Sanpaolo has ranked first among European banks as the Best Company Board for the third time, maintaining the top position since the category's introduction [2] - Stefano Del Punta has been voted Best CFO for the eighth consecutive year, and the Investor Relations team, led by Marco Delfrate and Andrea Tamagnini, has ranked the best in European banking for the seventh year [3] - Intesa Sanpaolo has been recognized for its Best ESG Program among European banks for the fifth consecutive year, highlighting the Group's commitment to ESG strategy, engagement, and disclosure [3] Management and Strategy - The recognition of Intesa Sanpaolo's leadership is attributed to the commitment of its people, a skilled management team, a well-diversified business model, and significant investments in technology [5] - The company emphasizes the importance of transparency and responsible communications in its dialogue with stakeholders, which has been appreciated by investors and financial analysts [5] - Intesa Sanpaolo's ability to meet and exceed commitments, along with its sensitivity to ESG issues, positions it as a global leader in Social Impact [5]

Core Viewpoint - Intesa Sanpaolo is expected to continue its stock price appreciation due to its strong market position, diversified revenue streams, and solid capital return policy [1][3]. Financial Performance - In H1, Intesa Sanpaolo reported a net profit of €4.77 billion, with Q2 results of €2.47 billion, surpassing analysts' estimates of €2.3 billion [2]. - The bank's net operating income increased by 9.6% to €13.6 billion, with net interest income of €7.9 billion and net commissions of €4.6 billion [2]. - The cost/income ratio improved to 38.3%, with expenses reduced to €5.2 billion [2]. - Impaired loans reached a minimum of 1.1% of total loans, with a CET1 ratio of 13.5% [2]. Capital Return and Future Outlook - The bank confirmed a higher dividend per share (DPS) for 2024 and 2025, with a net income outlook above €8.5 billion in the next two years [3]. - Intesa Sanpaolo identified €100 billion in client financial assets to expand its asset management business, supported by a network of over 16,000 advisors [3]. - The company plans an annual buyback of €1.5 billion in 2025 and 2026, translating to a yield of 11-12% [3]. Valuation and Earnings Projections - The forecast for 2024 includes €27 billion in sales and a net income of €8.45 billion, with 2025 earnings projected at €8.65 billion and EPS of €0.50 [5]. - The target price is set at €3.75 per share, based on a blended methodology of 7x P/E and a 15% 2025 RoTE estimate [5].

Core Viewpoint - The comparison between Intesa Sanpaolo SpA (ISNPY) and HDFC Bank (HDB) indicates that ISNPY presents a better value opportunity for investors at this time [1]. Valuation Metrics - Intesa Sanpaolo SpA has a Zacks Rank of 2 (Buy), while HDFC Bank has a Zacks Rank of 4 (Sell), suggesting a more favorable earnings outlook for ISNPY [3]. - The forward P/E ratio for ISNPY is 7.82, significantly lower than HDB's forward P/E of 20.97, indicating that ISNPY may be undervalued [5]. - ISNPY has a PEG ratio of 0.88, while HDB's PEG ratio is 1.66, further supporting the notion that ISNPY is a more attractive investment based on expected earnings growth [5]. - The P/B ratio for ISNPY is 1, compared to HDB's P/B of 2.59, reinforcing ISNPY's superior valuation metrics [6]. - Overall, ISNPY holds a Value grade of B, while HDB has a Value grade of C, highlighting ISNPY's stronger position in terms of value [6].

Core Viewpoint - Intesa Sanpaolo continues to achieve record financial results, outperforming European financial peers with a return of approximately 28% since January, compared to around 7% for the peer group [1][3]. Financial Performance - The first half of 2024 saw Intesa Sanpaolo report a return on tangible equity (ROTE) exceeding 20%, although this may represent a peak due to falling Eurozone interest rates [2]. - The bank's shares have appreciated over 20% since the last coverage, with the tangible book value per share (TBVPS) multiple increasing from around 1x to 1.3x [3]. - Net interest income (NII) grew by 2% sequentially to just over €4 billion in the last quarter, supported by a €160 billion structural hedge [6]. Market Position - Intesa Sanpaolo is the largest bank in Italy, holding market-leading shares in loans (approximately 18%), deposits (around 22%), and asset management (about 23%) [4]. - The bank's significant non-interest income generation accounts for over 40% of total revenue, with net fee and commission income increasing by 5% sequentially to €2.38 billion [8][9]. Cost Management - Operating expenses were reported at €2.65 billion, down approximately 1.5% year-over-year, contributing to a cost/income ratio below 40%, one of the best in its peer group [9][10]. - Loan loss charges were around 30 basis points in Q2, aligning with the medium-term target of 30-40 basis points, indicating stable asset quality with gross non-performing loans around 2% [10]. Valuation and Future Outlook - Shares are currently trading at €3.34 in Milan, with a target price of €3.90 (~$25.55 per ADS) in three years, suggesting a pre-tax total return of around €4.90 ($32.10 per ADS) inclusive of dividends [11][12]. - Management's capital returns policy is heavily dividend-focused, with approximately 70% of net income allocated to dividends and a €1.7 billion buyback initiated in June [11].