Intesa Sanpaolo(US:ISNPY)2022-05-08 11:55Financial Data and Key Metrics Changes - In Q1 2022, the company reported a net income of €1.7 billion, the best quarterly performance since 2008 when excluding provisions for the Russia-Ukraine exposure [9][31][49] - The company provisioned €800 million for the Russia-Ukraine exposure, which impacted the net income [9][34] - The outlook for 2022 was revised to more than €4 billion net income, assuming no critical changes to commodity supplies [10][53] Business Line Data and Key Metrics Changes - Net interest income grew over 1% on a quarterly basis, with a 1.3% increase when adjusted for the number of days [14][35] - Commission income saw a 1% year-on-year growth, with significant contributions from wealth management and insurance [32][24] - Operating costs decreased by 3.2% year-on-year, improving the cost-income ratio to 46.3% [21][15] Market Data and Key Metrics Changes - The company reported a €28 billion increase in short-term direct deposits year-on-year, which will support wealth management growth [24][36] - The NPL stock is now lower than €6 billion, with an NPL ratio of just 1%, positioning the company among the best in Europe [20][50] Company Strategy and Development Direction - The new business plan focuses on four pillars: massive upfront de-risking, structural cost reduction, growth in commissions, and significant ESG commitment [16][30] - The company aims to achieve a net income target of €6.5 billion by 2025, with a 70% payout ratio each year [12][53] - The company is transitioning towards a digital bank with the establishment of Isybank and significant investments in technology [22][29] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the company's resilience and ability to navigate the challenging environment, citing strong fundamentals in the Italian economy [47][49] - The management highlighted that the company is well-equipped to handle the impact of the Russia-Ukraine conflict, with a limited exposure of just 1% of group customer loans [39][41] - The management remains optimistic about achieving profitability targets despite geopolitical uncertainties [53][70] Other Important Information - The company has committed €10 million to support humanitarian initiatives related to the Ukraine crisis and has assisted employees affected by the conflict [28][27] - The company has a strong capital position with a fully phased common equity Tier 1 ratio of 13.6% [42][86] Q&A Session Summary Question: Share buyback approval status - The company submitted the buyback proposal to the ECB on April 1, 2022, and expects approval within 90 days [60][63] Question: Cost and IT investments flexibility - The company retains flexibility in its IT investments and does not foresee delays, emphasizing the importance of technological upgrades [64][66] Question: Profitability outlook assumptions - The management provided insights into the assumptions behind the profitability outlook, indicating a conservative approach to provisioning and exposure management [68][70] Question: Provisions for Russia and Ukraine exposures - The management explained the rationale behind the provisions for Russia and Ukraine, emphasizing a country risk approach [100][104] Question: Interest rate sensitivity - The management confirmed that for every 50 basis points increase in interest rates, net interest income could increase by more than €900 million [37][115]