Intesa Sanpaolo(US:ISNPY)2022-11-06 11:40Financial Data and Key Indicators Changes - In Q3 2022, the company achieved a net income of €4.4 billion, excluding provisions for Russia de-risking, marking the best nine-month performance since 2008 [4][11] - The net interest income grew by more than 8% year-on-year, with a quarterly increase of 14% despite lower benefits from TLTRO [14][15] - The net NPL ratio reached a record low of 1%, with a reduction in NPL stock by almost €7 billion year-on-year [22][24] Business Line Data and Key Indicators Changes - Insurance income reached a record high, driven by strong growth in non-motor P&C revenues [14] - Operating costs decreased by almost 2% year-on-year, demonstrating effective cost management despite inflation [21][32] - The company reported a total contribution from net interest income, commissions, and insurance income up over 6% year-on-year [15] Market Data and Key Indicators Changes - Customer financial assets were around €1.2 trillion, with short-term direct deposits increasing by €12 billion year-on-year [20] - The company allocated €30 billion to assist families and businesses facing high energy costs, reflecting its commitment to the real economy [10] Company Strategy and Development Direction - The company is focused on delivering high-quality results in the short term while building a strong bank for the next decade through ongoing execution of its business plan [6][26] - The rollout of Isybank, the new digital bank, is accelerating with significant investments and hiring of around 300 specialists [7] - The company aims to exceed its €6.5 billion net income target for 2025, supported by strong net interest income and a zero-NPL status [6][36] Management's Comments on Operating Environment and Future Outlook - The management remains positive about the Italian economy, citing stronger fundamentals compared to previous crises [8][30] - Despite potential economic slowdowns in 2023, the company expects a quick recovery in 2024, supported by government interventions and EU financial support [30] - The management upgraded the net income guidance for 2022 to more than €4 billion, reflecting strong operating performance and reduced Russia exposure [33][34] Other Important Information - The company has already accrued €2.3 billion in dividends and plans to distribute €1.4 billion as an interim dividend [5][34] - The company is committed to a 70% cash payout ratio and has completed the first tranche of its share buyback program, repurchasing around 5% of shares [5][34] Q&A Session Summary Question: What is the reasonable level of cost of risk considering a mild recession in 2023? - The management expects a cost of risk between 25 and 30 basis points, with a potential increase of 10 basis points if non-performing loans are disposed of [46][47] Question: What is the guidance for net interest income for 2023? - The expectation is for net interest income to be well above €11 billion, with an increase of €2 billion at a Euribor rate of 2% [44][45] Question: What is the company's view on the potential introduction of a banking tax in Italy? - The management has no evidence of a banking tax being introduced in Italy and believes the current taxation is already significant compared to other European countries [59][60] Question: How will the company manage the share buyback program? - The management will wait for the final results of the group before deciding on the second tranche of the buyback, emphasizing the importance of maintaining capital during uncertain economic conditions [50][56] Question: What is the impact of TLTRO on the company's financials? - The management indicated that TLTRO will not have a significant impact going forward, and they plan to repay it in a relatively short period depending on loan volumes [86][87]