3Q22 results: statement by CEO Carlo Messina

Intesa Sanpaolo today announced its financial and operating results for the first nine months of 2022. The Group achieved a net income of €4.4 billion when excluding provisions for exposure to Russia and Ukraine; the best nine-month result since 2008.

Commenting on Intesa Sanpaolo’s 9M22 results, CEO Carlo Messina stressed how, in the third quarter alone, the Group reduced its exposure to Russia by approximately 65%, now down to just 0.3% of the Group's customer loans. Intesa Sanpaolo can already be considered a bank with zero exposure to Russia, he says, and will continue to work to reduce the limited residual exposure.

Faced an extraordinarily complex macro scenario, Intesa Sanpaolo’s CEO defined the nine-month results as “high quality, driven by a strong acceleration of Net interest income“.

The full statement by Carlo Messina, CEO of Intesa Sanpaolo, follows:

“In the first nine months of 2022, our Bank faced an extraordinarily complex scenario. The grave international crisis caused by the conflict unleashed by Russia in Ukraine, with the significant increase in inflation, have found a solid Italian economy capable of reacting.

“In the face of an economic slowdown next year, we see the prospect of a clear return to growth the following year. All this thanks to a flexible and dynamic industrial economy, with competitive companies active in international markets, that place us at the top globally in terms of trade balance.

“At the same time, we are aware that the energy crisis and the increase in the cost of living are causing a significant deterioration in the living standards of many families, in an already difficult social context.

“For these reasons, we have allocated €30 billion to support businesses and households, providing the opportunity to suspend or reschedule mortgages and loans, granting lending at lower rates and permitting installments at zero rates. All this confirms our role as a point of reference for the real economy, also thanks to our over €400 billion lending program to support the implementation of the NRRP. The massive resources provided to the country are made possible by our solidity, our profitability and the professionalism of our people.

“Commenting on our nine-month results, I would like to stress how, in the third quarter alone, we reduced our exposure to Russia by approximately 65%, now down to just 0.3% of the Group's customer loans. We can already be considered a bank with zero exposure to Russia and we will continue to work to reduce the limited residual exposure.

“Whenever we see a problem emerging, we face it immediately and put robust solutions into action. We did this with NPLs and subsequently with the pandemic. And now we have done this with our exposure to Russia. This is our managerial approach, aimed at delivering high and sustainable profitability in the medium- and long-term. Strong value creation and value distribution are and will continue to be our top priority.

“Net income in the first nine months was €4.4 billion, excluding provisions for exposure to Russia and Ukraine; the best nine-month result since 2008. Excluding these provisions, we are fully in line with the target net income of over €5 billion in 2022, as set in our 2022-2025 Business Plan.

“We completed the first tranche of the share buyback on 11 October, for an amount of €1.7 billion. We have already accrued €2.3 billion of dividends related to net income in the first nine months of 2022, and on 23 November we will distribute €1.4 billion as interim dividends.

“We have been able to achieve these excellent results thanks to the main industrial initiatives of the 2022-2025 Business Plan, that will project the Group into the next decade. We confirm the €6.5 billion net income target for 2025 and the 70% dividend payout in each year of the Plan.

“The strength of these results was driven by the high quality of our operating performance. Net interest income in the nine months grew significantly, up 8.2% year-on-year. In the third quarter, there was a strong acceleration despite a lower contribution from TLTRO, growing 14.2% versus the second quarter of 2022. Commissions showed resilience in an unfavorable market environment; insurance profits hit record highs.

“While we continue to invest in our growth levers – especially in technology – costs further decreased by 1.8% compared to the first nine months of last year, and the cost/income ratio – at 49.4% – places us at the top compared to our European peers. The start-up of our new digital bank, Isybank, which will significantly improve the Group’s cost structure, is proceeding rapidly. Isybank’s technology delivery unit (Isy Tech) has hired 300 specialists and we are also strengthening the digital skills of the Bank's core business.

“We further improved the Group’s asset quality thanks to a €3.9 billion reduction in gross impaired loans from the end of 2021, while flows of NPLs are at historic lows. The net NPL ratio is now 1.0% according to the EBA methodology.

“Our capital structure remains extremely solid and far exceeds regulatory requirements with a Common Equity Tier 1 ratio of 12.4%, without considering the approximately 110 basis point benefit from the absorption of deferred tax assets (DTA) – of which approximately 40 basis points during the Business Plan horizon – and considering the deduction of €2.3 billion in dividends accrued in the first 9 months of 2022 and €3.4 billion in buybacks.

“Intesa Sanpaolo is the engine of Italy’s real and social economies: in the first nine months of the year, medium/long-term lending to households and businesses in Italy was €46 billion (out of a Group total of €64.5 billion) and we helped 3,200 Italian companies return to performing status.

“We are continuing and strengthening our program to support people in need, with the commitment to reach 50 million interventions during the Plan, in addition to the 28 million interventions carried out since 2019. In the first nine months of the year, we have provided €6.5 billion of social credit related to the target of €25 billion of cumulative flows announced in the Business Plan.

“The professional quality of our people has been and remains the key factor in achieving solid, sustainable results in favor of all stakeholders: our thanks go to them”.