G Generali Ass

By Giovanni Legorano

ROME--Italian bank Intesa Sanpaolo SpA confirmed Friday it will distribute 3 billion euros ($3.23 billion) in dividends for last year, as it reported a rise in both its fourth-quarter and full-year net profit.

The banks said its fourth-quarter net profit soared to EUR776 million, from EUR13 million in the same period of 2015, when the bank was hit by a one-off contribution to a bailout fund set up to rescue four smaller Italian lenders.

The bank said that without one-off contributions to a national resolution fund for banks and other funds, as well as a writedown of its stake in Atlante, a rescue fund for banks, its net profit for the fourth quarter of 2016 would have been EUR1.15 billion.

Net profit for the year rose 14% at EUR3.11 billion.

Intesa's shares pared gains immediately after the release of its fourth-quarter results, but then rose again and were recently up 1.5% at EUR2.21.

The bank has been under the spotlight after it said last week it was assessing a potential tie-up with Assicurazioni Generali SpA, as part of its strategy of growth in the insurance, asset-management and the private banking sectors.

In a statement earlier Friday, the bank reiterated a tie-up with Generali was one of the many options the bank was assessing, denying press reports that the bank was ready to table a takeover offer.

"We are players in the European context, ready to seize growth opportunities on condition that we maintain unchanged our ability to significantly reward our shareholders and our capital strength," the bank's Chief Executive Carlo Messina said after the release of the fourth-quarter results.

Apart from the one-off charges, which analysts said will weaken most Italian banks' results, the lender posted higher revenue helped by rising commissions and trading income.

Net commissions for the quarter rose 7% to EUR2.02 billion from the same three months a year earlier, as the bank continues with its transition to a more fee-based business.

Trading income rose more than fourfold to EUR247 million in the fourth quarter, compared with the last quarter of 2015.

This helped compensate for declining net interest income - the difference between what lenders earn from loans and pay for deposits, and a key profit driver for retail banks - and higher provisions for losses on bad loans.

However, the bank said the stock of bad loans sitting on its balance sheet declined by 10% from the end of 2015.

Intesa also confirmed its target of a total dividend payout of EUR10 billion over the period of 2014 to 2017.

The bank also said it has agreed the sale of a 4.88% stake in the Bank of Italy to a number of Italian banking foundations and pension funds for a total EUR366 million.

Intesa will hold a 27.81% stake in the Bank of Italy after the share sale. In 2014, the central bank's capital was raised to EUR7.5 billion from EUR156,000, a level that hasn't changed since 1936 when local banks recapitalized the Bank of Italy. At the time, the Italian parliament also set a 3% limit on stakes that individual investors can own in the central bank.

-Write to Giovanni Legorano at Giovanni.Legorano@wsj.com

(END) Dow Jones Newswires

February 03, 2017 09:44 ET (14:44 GMT)

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