Intesa Sanpaolo:

Turin - Milan, 29 July 2022 – At its meeting today, the Board of Directors of Intesa Sanpaolo approved the consolidated half-yearly report as at 30 June 2022.

The results for the first half of 2022 confirm that Intesa Sanpaolo has been able to generate solid profitability and create value for all its stakeholders even in complex contexts, such as the context characterised by the current events involving Russia and Ukraine and the COVID-19 pandemic, thanks to its well-diversified and resilient business model. Value generation for all stakeholders is also grounded in the strong ESG commitment of Intesa Sanpaolo. In the first half of the year, this translated, among other actions, into a one-off contribution of around €50m to the Group’s people (excluding the managers) to mitigate the impact of inflation and into several humanitarian initiatives to support people of the Group’s subsidiary Pravex Bank and the Ukrainian population.

Net income for the first half of the year was €3,276m when excluding write-downs of €1.1bn for Russia and Ukraine, fully in line with the 2022-2025 Business Plan net income target of over €5bn for this year. Stated net income amounted to €2,354m. Almost all cross-border loans to Russia are performing and classified in Stage 2.

The formula of the 2022-2025 Business Plan and, specifically, the 2025 net income target of €6.5bn are confirmed. The implementation of the Plan is proceeding at full speed, with the key industrial initiatives well underway.

Discover the entire results in the linked article.

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THE RESULTS FOR THE FIRST HALF OF 2022 CONFIRM THAT INTESA SANPAOLO HAS BEEN ABLE TO GENERATE SOLID PROFITABILITY AND CREATE VALUE FOR ALL ITS STAKEHOLDERS EVEN IN COMPLEX CONTEXTS, THANKS TO A WELL-DIVERSIFIED AND RESILIENT BUSINESS MODEL.

THE IMPLEMENTATION OF THE 2022-2025 BUSINESS PLAN IS PROCEEDING AT FULL SPEED, WITH THE KEY INDUSTRIAL INITIATIVES WELL UNDERWAY. THE BUSINESS PLAN FORMULA  AND, SPECIFICALLY, THE 2025 NET INCOME TARGET OF €6.5 BILLION ARE CONFIRMED, WITH ADDITIONAL POTENTIAL UPSIDE DERIVING FROM AN INTEREST RATE INCREASE, HIGH FLEXIBILITY IN MANAGING OPERATING COSTS, AND THE ZERO-NPL BANK STATUS.

NET INCOME FOR H1 2022 WAS €3,276 MILLION WHEN EXCLUDING WRITE-DOWNS FOR RUSSIA AND UKRAINE, FULLY IN LINE WITH THE 2022-2025 BUSINESS PLAN NET INCOME TARGET OF OVER €5 BILLION FOR THIS YEAR. STATED NET INCOME WAS €2,354 MILLION.

VALUE GENERATION FOR ALL STAKEHOLDERS IS ALSO GROUNDED IN INTESA SANPAOLO’S STRONG ESG COMMITMENT WHICH IN THE FIRST HALF OF THE YEAR TRANSLATED, AMONG OTHER ACTIONS, INTO A ONE-OFF CONTRIBUTION OF AROUND €50 MILLION TO THE GROUP’S PEOPLE (EXCLUDING THE MANAGERS) TO MITIGATE THE IMPACT OF INFLATION AND INTO SEVERAL HUMANITARIAN INITIATIVES TO SUPPORT PEOPLE OF THE GROUP’S SUBSIDIARY PRAVEX BANK AND THE UKRAINIAN POPULATION.

THE CAPITAL POSITION WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS: FULLY LOADED COMMON EQUITY TIER 1 RATIO WAS 12.5% DEDUCTING FROM CAPITAL €1.6 BILLION OF DIVIDENDS ACCRUED IN H1 2022 AND THE €3.4 BILLION BUYBACK AUTHORISED BY THE ECB, WITHOUT TAKING INTO ACCOUNT A BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 40 BASIS POINTS OVER THE 2022-2025 BUSINESS PLAN HORIZON.

OPERATING MARGIN WAS UP BY 4.2% ON H1 2021, WITH OPERATING INCOME UP BY 0.9% AND OPERATING COSTS DOWN BY 2.5%.

CREDIT QUALITY IMPROVED:
- GROSS NPLs WERE REDUCED BY 26.9% ON YEAR-END 2021;
- NPL RATIO WAS 2.3% GROSS AND 1.3% NET, RESPECTIVELY 1.8% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2.2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.7% AND 1% ACCORDING TO THE EBA METHODOLOGY;
- ANNUALISED COST OF RISK IN H1 2022 STOOD AT 61 BASIS POINTS, 27 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF THE PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS.
INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN H1 2022, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €32 BILLION. IN H1 2022, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF AROUND 2,100 COMPANIES, THUS SAFEGUARDING AROUND 10,000 JOBS. THIS BROUGHT THE TOTAL TO AROUND 135,000 COMPANIES SINCE 2014, WITH AROUND 675,000 JOBS SAFEGUARDED OVER THE SAME PERIOD.

• NET INCOME OF €3,276M IN H1 2022 WHEN EXCLUDING WRITE-DOWNS FOR THE RUSSIA-UKRAINE EXPOSURE (UP 8.4% VS €3,023M IN H1 2021). STATED NET INCOME OF €2,354M.
• OPERATING MARGIN UP BY 4.2% ON H1 2021
• OPERATING INCOME UP BY 0.9% ON H1 2021
• OPERATING COSTS DOWN BY 2.5% ON H1 2021
• IMPROVEMENT IN CREDIT QUALITY TREND:
• DECREASE IN NPLs:
- GROSS NPL REDUCTION OF AROUND €54BN SINCE THE SEPTEMBER 2015 PEAK
- NPL STOCK DOWN 26.9% GROSS AND 13% NET ON YEAR-END 2021
- NPL TO TOTAL LOAN RATIO OF 2.3% GROSS AND 1.3% NET, RESPECTIVELY 1.8% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2.2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.7% AND 1% ACCORDING TO THE EBA METHODOLOGY
• ANNUALISED COST OF RISK IN H1 2022 TO 61 BASIS POINTS (FROM 59 BASIS POINTS IN 2021), 27 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS (FROM 25 BASIS POINTS IN 2021 WHEN EXCLUDING PROVISIONS TO ACCELERATE NPL DELEVERAGING)
• SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS:
• COMMON EQUITY TIER 1 RATIO AS AT 30 JUNE 2022, AFTER DEDUCTING FROM CAPITAL (*) €1.6BN OF DIVIDENDS ACCRUED IN H1 2022 AND THE €3.4 BN BUYBACK (°):
- 12.7 % PHASED-IN (1)
- 12.5% FULLY LOADED (2) (3) WITHOUT TAKING INTO ACCOUNT THE BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 40 OVER THE 2022-2025 BUSINESS PLAN HORIZON
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(*) Deducting from capital also the coupons accrued on the Additional Tier 1 issues.
(°) Amount, approved by the Shareholders’ Meeting and authorised by the ECB, equivalent to the 2019 suspended dividend.
(1) Calculated including the mitigation of the impact of the first time adoption of IFRS 9.
(2) Calculated excluding the mitigation of the impact of the first time adoption of IFRS 9.
(3) Estimated pro-forma fully loaded Common Equity Tier 1 ratio of 13.6%, taking into account the total absorption of deferred tax assets (DTAs) related to goodwill realignment, loan adjustments, the first time adoption of IFRS 9 and the non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the Aggregate Set of Banca Popolare di Vicenza and Veneto Banca, as well as the expected absorption of DTAs on losses carried forward and DTAs related to the acquisition of UBI Banca and the agreement with the trade unions of November 2021, and the expected distribution on the H1 2022 net income of insurance companies.