Intesa Sanpaolo (ISP) Q4 2023 earnings summary

Executive summary

• FY23 net income reached a record €7.724bn, up 76.4% YoY; Q4 net income was €1.602bn, up 49% YoY.

• Operating income rose 17.2%, operating margin 31.4% and gross income 64.6%; cost/income fell to 45.1%.

• Customer financial assets increased €102bn to €1,306bn; net NPL ratio was 0.9% under EBA methodology and fully phased-in CET1 was 13.7%.

Financial highlights

• FY23 net interest income was €14.646bn, up 54.2%; fees were €8.558bn, down 4.0%, and insurance income was €1.666bn, down 0.5%.

• Operating income was €25.138bn, up 17.2%; operating costs rose 3.6% to €11.329bn, while operating margin reached €13.809bn, up 31.4%.

• Gross income increased 64.6% to €12.058bn; FY23 net income excluding banking-industry levies and charges was €8.209bn. The final Resolution Fund contribution was €323m pre-tax.

• Q4 operating income was €6.373bn, up 12.5% YoY; operating margin was €2.905bn, up 14.5%, and net income was €1.602bn versus €1.900bn in Q3.

• Q4 net income included a €352m tax benefit from UBI deferred tax assets; FY23 included €86m of write-downs supporting de-risking and balance-sheet strengthening.

Outlook and guidance

• Net income is expected to exceed €8bn in both 2024 and 2025; FY24 revenue growth is expected from net interest income, fees and insurance.

• FY24 operating costs are expected to remain stable despite technology investment, supported by lower personnel expenses; cost of risk is expected to remain low.

• A 70% annual cash payout ratio is envisaged, with further distributions assessed year by year; dividend per share is expected to increase in 2024–2025 versus 2023.

• 2025 fully phased-in CET1 target is above 14% before Basel 4, above 13.5% post-Basel 4 and above 14.5% post-Basel 4 including DTA absorption, with planned payout and buyback.

• Technology initiatives are expected to add ~€500m to 2025 gross income beyond the Business Plan, from cloud platforms, digital channels and AI.