Intesa profit beats forecast on higher rates, trader | The mighty 790 KFGO

By Valentina Za

MILAN (Reuters) – Italy’s biggest bank Intesa Sanpaolo on Friday posted a better-than-expected second-quarter profit, helped by higher interest rates and trading gains, which offset the impact of net charges on crude markets.

Intesa confirmed its financial targets for the year after April-June net profit reached 1.33 billion euros ($1.36 billion), down 12% from a year ago. year, but well ahead of the consensus analyst forecast of 1.03 billion euros in a Reuters poll.

Rival UniCredit also beat expectations this week, on stronger earnings and plummeting loan writedowns, doubling its net profit from a year earlier and boosting its 2022 profit outlook.

Intesa’s revenue reached 5.35 billion euros, beating analysts’ average estimate of 5.09 billion.

Rising interest rates pushed lending revenue up 5% year-on-year despite large disposals of bad loans, leading analysts not to expect a major boost from policy tightening. monetary policy.

Under a multi-year strategy unveiled in February, Intesa aims to keep its bad loans at “near-zero” levels typical of Nordic rather than Mediterranean banks.

“Overall a decent quarter from Intesa with surprisingly good net interest income,” brokerage Autonomous said, adding that the decision to approve a €1.1 billion interim dividend in November was positive.

Intesa, which has made a hallmark of its generous payouts, deducted in full from capital during the quarter a proposed share buyback of 3.4 billion euros, dropping its Tier 1 capital ratio to 12 .5%, even if it only realizes half of it for the moment.

Profit was also buoyed by lower-than-expected loan loss provisions, with Intesa booking 730 million euros of charges in the period, nearly half of which related to Russia and Ukraine.

Their presence in Russia cost Intesa and UniCredit 1.1 billion euros each in provisions against potential losses in the first half.

Italy’s two major banks are struggling to extricate themselves from Russia following the invasion of Ukraine, failing to find buyers for their local businesses after international sanctions reduced the number of potential counterparties.

Intesa, whose strong social commitment reflects the Roman Catholic values ​​of its banking founding shareholders, said it would pay 500 euros each to 82,000 non-executive employees to help them cope with soaring inflation.

($1 = 0.9776 euros)

(Reporting by Valentina Za; Editing by Agnieszka Flak and Mark Potter)

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