Intesa Sanpaolo(US:ISNPY)2023-11-03 18:50Financial Data and Key Metrics Changes - The company reported a net income of €6.1 billion for the first nine months of 2023, with €1.9 billion in Q3, marking the best nine-month and Q3 results in 16 years [7][14][19] - Net interest income increased by 65% year-over-year, with total revenues up nearly 20% [19][20] - The company improved its net income guidance for 2023 to above €7.5 billion [8][44] - The common equity ratio stands at 13.6%, with a projected increase in net income for 2024 and 2025 [10][44] Business Line Data and Key Metrics Changes - In Q3, net interest income rose over 6% quarter-over-quarter, contributing to record quarterly revenues, which were up 27% year-over-year [20][21] - Direct customer deposits increased by €3.5 billion in Q3, reaching the highest level ever [13][22] - The property and casualty insurance segment contributed more than €480 million in the nine-month period [23] Market Data and Key Metrics Changes - Customer financial assets exceeded €1.2 trillion, with an increase of almost €40 billion in the nine months [22] - The net NPL ratio is at 1%, with NPL inflows at historical lows, driving the cost of risk to just 28 basis points [25][28] Company Strategy and Development Direction - The company is focused on a tech transformation with over €2 billion invested, aiming to enhance efficiency and customer service through digital channels and artificial intelligence [5][34] - A strong commitment to ESG initiatives is evident, with a €1.5 billion contribution planned by 2027 to address social inequalities [12][18] - The company aims to maintain a high dividend yield of 11.5%, with a 70% cash payout on stated net income [8][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Italian economy's resilience, projecting growth close to 1% for the year [41] - The company remains committed to supporting families and businesses facing challenges, emphasizing its role in social impact [11][12] - Future net income is expected to be higher than in 2023, with a focus on maintaining a strong capital position [8][44] Other Important Information - The company has a strong liquidity position, with a liquidity coverage ratio well above regulatory requirements [30][31] - The company is actively reducing its exposure to Russia, nearing zero [10][28] Q&A Session Summary Question: Capital distribution and profitability outlook for 2024 - Management confirmed that 12% CET1 ratio is adequate, with plans for share buybacks as part of capital distribution [51][55] - For 2024, net interest income is expected to increase, driven by higher Euribor rates and improved commission income [59][66] Question: NII assumptions and cost trends - Management expects stable deposit trends and a slight increase in loan volumes, with a focus on cost reduction [70][74] - The company aims for a reduction in costs excluding technology investments, while managing personnel costs effectively [75][76] Question: Stage 2 loans and Isybank migration - Management highlighted proactive measures to monitor and improve Stage 2 loans, with a successful migration to Isybank [78][89] - The migration has seen minimal disruption, with a high level of customer satisfaction [88][90] Question: Digital euro risks and opportunities - Management has not budgeted for digital euro investments in 2023 but plans to assess its impact in 2024 [97][100] Question: Impact of labor contracts on P&L - Management indicated that while personnel costs will increase, reductions from workforce adjustments will help mitigate overall cost increases [108]