Intesa Sanpaolo(US:ISNPY)2023-02-03 23:20Financial Data and Key Metrics Changes - For 2022, the company reported a net income of €5.5 billion excluding provisions for Russia de-risking, which is well above the business plan target. Including Russia de-risking, net income was €4.4 billion, marking the best result in 15 years [6][15][33] - The company achieved the best-ever year for operating income, operating margin, and gross income, with Q4 being the best quarter ever for revenues [8][15] - The common equity ratio increased to 13.5%, up 110 basis points in Q4, reflecting a strong capital position [9][27] Business Line Data and Key Metrics Changes - Net interest income grew by 20% in 2022, with a significant acceleration in Q4, where it was up almost 60% year-on-year [19][20] - Commissions were resilient, with a slight increase of 3% on a quarterly basis despite the absence of performance fees [20] - Insurance income reached a record high, driven by strong growth in non-motor P&C revenues [19] Market Data and Key Metrics Changes - Customer financial assets reached €1.2 trillion, with a €26 billion increase in Q4, indicating strong growth in wealth management [23] - The company provided €400 billion in lending to the real economy, highlighting its commitment to supporting families and businesses [14] Company Strategy and Development Direction - The company aims to exceed its €6.5 billion net income target for 2025, driven by interest rate increases and a strong focus on cost management [7][18] - The execution of the 2022 business plan is proceeding at full speed, with 70% of initiatives ahead of schedule [29] - The company is committed to being a zero-Russia and zero-NPL bank, having reduced its gross NPL by €4.6 billion and its Russia exposure to below 0.3% of group exposure [10][24] Management's Comments on Operating Environment and Future Outlook - Management remains positive about the macroeconomic environment, expecting a quick recovery for the Italian economy by 2024 [12] - The company anticipates significant operating margin growth in 2023, driven by net interest income and a focus on cost management [33] - Management emphasized the importance of maintaining a conservative approach to guidance and capital distribution [66][69] Other Important Information - The company plans to distribute cash dividends of €3 billion, maintaining a 70% payout ratio, and will launch a second tranche of share buybacks [5][34] - The company has a strong capital position, with expectations to maintain a Common Equity Tier 1 ratio above 12% [10][35] Q&A Session Summary Question: What are the regulatory headwinds expected in 2023? - Management indicated an updated impact of approximately 70 basis points related to regulatory headwinds, with additional impacts from IFRS 17 [52][53] Question: Guidance for 2023 net income? - Management expects net income to be well above €5.5 billion, with a strong increase in net interest income of €2.5 billion [37][41] Question: Capital returns and payout mix? - Management confirmed a 70% payout ratio and indicated that decisions on excess capital distribution will be made at the end of 2023 [60][66] Question: Deposit betas and competition? - Management stated a conservative deposit beta assumption of 35% to 40%, emphasizing their market leadership in Italy [62][63] Question: Clarification on cost of risk? - Management noted a cost of risk of 30 basis points, with particular attention on commercial real estate and energy sectors [75][86]