Intesa Sanpaolo(US:ISNPY)2023-05-05 22:57Financial Data and Key Metrics Changes - The company reported a net income of €2 billion for Q1 2023, marking the best quarter since 2007, with a nearly 19% year-over-year increase [3][9] - The common equity ratio increased to 13.7%, with expectations to reach close to 14% post Basel IV in 2025 [4][19] - The cost of risk was reported at a historical low of 17 basis points, with no release of overlays [9][18] Business Line Data and Key Metrics Changes - Net interest income rose by almost 70% year-over-year and 6% quarter-over-quarter, driven by an increase in market interest rates [12][13] - Customer financial assets increased by €11 billion in Q1, indicating strong growth in wealth management [14] - Operating costs remained stable year-over-year, with the lowest cost-income ratio recorded [9][16] Market Data and Key Metrics Changes - The company has a strong liquidity position with over €100 billion in excess medium/long-term liquidity and a liquidity coverage ratio well above regulatory requirements [5][11] - Direct deposits saw a slight decline, but there was a €4 billion growth in April, indicating a positive trend [15] Company Strategy and Development Direction - The company aims to exceed its €6.5 billion net income target by 2025, supported by rising interest rates and a strong focus on wealth management and advisory services [5][24] - The digital bank, Isybank, is set to launch by summer 2023, highlighting the company's commitment to technology evolution [6][21] - The company is focused on maintaining a strong capital position while rewarding shareholders through dividends and buybacks [4][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery in Italy, driven by lower energy prices and easing inflation [6][22] - The company is committed to supporting families and businesses facing economic challenges, with €400 billion in lending to the real economy [8][20] - The outlook for 2023 has been upgraded to a net income guidance of €7 billion, reflecting strong performance and market conditions [5][25] Other Important Information - The company has reduced its NPL stock by €54 billion since 2015, achieving a net NPA ratio of 1% [17] - The company is actively involved in social initiatives, contributing to community support and job preservation [20] Q&A Session Summary Question: Capital usage and net interest income assumptions - The management discussed the capital position, indicating a comfortable range between 13.5% and 14% for 2023, with significant excess capital expected in the coming years [29][30] - Regarding net interest income, a deposit beta of 40% is anticipated by year-end, with a conservative estimate for the total amount of deposits [41][42] Question: Fee and commission outlook - Management acknowledged weak fee and commission performance in Q1 but expects a rebound in 2024, focusing on structural improvements rather than immediate revenue increases [46][64] Question: Regulatory headwinds and cost of risk - The cost of risk is projected to be between 35 and 40 basis points for the year, with a positive outlook on asset quality and economic conditions [54][56] Question: Windfall tax implications - Management expressed willingness to comply with any government-imposed taxation, emphasizing the importance of using such funds to address social inequalities [70][72]