Intesa Sanpaolo(US:ISNPY)2024-02-06 18:45Financial Data and Key Metrics Changes - The company reported a record net income of €7.7 billion for 2023, marking a 76% increase year-over-year [6][11] - The cost-income ratio reached its lowest level ever at 45% [26] - The company plans to distribute €5.4 billion in dividends for 2023, resulting in a dividend yield of 12%, the highest in Europe [4][17] - Net interest income is expected to grow significantly in 2024, with contributions from hedging facilities estimated to increase by €800 million to €900 million [65] Business Line Data and Key Metrics Changes - Wealth Management, Protection & Advisory services contributed nearly 50% to gross income in 2023, demonstrating resilience even in a high-interest rate environment [25] - Customer financial assets increased by over €100 billion year-over-year, reaching €1.3 trillion [24] - The company has identified €100 billion that can be converted into assets under management, aided by declining interest rates [15] Market Data and Key Metrics Changes - The company maintains a strong capital position with a common equity ratio of 13.7%, which is expected to increase further [29] - Non-performing loans (NPL) stock decreased to less than €10 billion, with a net NPL ratio below 1% [27] - The Italian GDP growth is projected to be above 1% in 2025, indicating a stable economic environment [32] Company Strategy and Development Direction - The company is focused on leveraging its diversified business model to succeed in any interest rate environment, particularly in Wealth Management [14] - A significant investment of €2.8 billion in technology and innovation is underway to enhance digital banking capabilities [8] - The company aims to maintain a high cash dividend payout ratio of 70% while evaluating additional distributions on a year-by-year basis [51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a net income above €8 billion for 2024 and 2025, driven by strong revenue growth and controlled costs [35] - The company is well-positioned to benefit from a potential reduction in Euribor rates, which could enhance commission income [46] - Management emphasized the importance of maintaining a conservative approach to cost of risk, targeting below 40 basis points [90] Other Important Information - The company has committed €1.5 billion to address social needs and promote inclusion, with over €300 million already deployed in 2023 [18] - The company is recognized as a leader in ESG initiatives, with €45 billion in new lending to support the green economy [20] Q&A Session All Questions and Answers Question: Can you walk us through the key P&L drivers for net profit guidance for 2024, particularly on NII? - Management highlighted that net interest income is expected to grow due to stable deposit bases and contributions from aging facilities, with a conservative estimate of a 10 to 20 basis points increase in costs [39][41] Question: Regarding the €300 million of non-recurring costs in Q4, is the guidance for stable costs in 2024 excluding this amount? - Management confirmed that the €300 million relates to variable compensation and is a one-off, with the 2024 budget being ambitious and unlikely to repeat this cost [100] Question: How does the company view the potential for capital distribution given strong capital generation? - Management intends to maintain a 70% cash dividend payout ratio and will assess special distributions on a year-by-year basis, emphasizing the importance of a solid capital position [51][52] Question: What is the company's outlook on asset quality and cost of risk? - Management stated that the cost of risk is expected to remain below 40 basis points, with no plans to utilize overlays, reflecting a conservative approach to risk management [75][90] Question: Can you provide an update on client migration for Isybank? - Management reported that 300,000 clients have been migrated to Isybank, with ongoing efforts to accelerate this process [104]