Intesa Sanpaolo Profit Rises as Wealth-Management Fees Climb -- Update
May 05 2017 - 8:09AM
Dow Jones News
By Giovanni Legorano
ROME--Intesa Sanpaolo SpA said Friday its first-quarter profit
rose by 12% from a year earlier, mainly reflecting higher fees and
commissions that offset declining revenue from lending and
insurance.
Net profit at Italy's second-largest bank by assets rose to 901
million euros ($984 million) from EUR806 million for the same
quarter in 2016. The bank's shares rose 2.8% to EUR2.84 in
afternoon trading.
Intesa 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 the Atlante rescue fund for banks, net profit for
the quarter would have been EUR1.18 billion.
These costs, incurred mainly by Italy's largest banks,
underscore how the troubles of weaker lenders hurt the results of
healthier ones.
Italian banks are still struggling to digest more than EUR350
billion in problematic loans they accumulated during the financial
crisis and they are trying to improve their profitability,
undermined by high costs and declining revenue on lenders'
traditional commercial activities.
In December, Banca Monte dei Paschi di Siena SpA asked the
Italian government to bail it out with a EUR20 billion fund the
Treasury earmarked to support ailing banks. Monte dei Paschi is a
perennial trouble spot in the Italian banking system and on
Thursday posted a net loss for the first quarter,
Two smaller banks, Banca Popolare di Vicenza SpA and Veneto
Banca SpA, said in March they requested state aid to stay
afloat.
Intesa said its fees and commissions rose by 10% to EUR1.86
billion from the same quarter a year earlier, mainly boosted by
higher fees on management and consulting activity on clients'
savings.
This result underscores the bank's continued push to tap
Italians' vast private wealth as a source of income and make
proportionally more revenue on fees and commissions than on
traditional lending activities as ultralow to negative rates hurt
the margin it makes on loans.
Net interest income for the quarter dropped by 3% to EUR1.81
billion compared with the first three months of last year.
The bank said this result would have been slightly higher than
the one booked for the first quarter of last year, if the effect of
the Egyptian currency's depreciation, which affected the income of
Intesa's Egyptian unit, were excluded.
Total revenue increased by 1% to EUR4.21 billion. Revenue from
the bank's insurance business dropped by 15% to EUR283 million.
Intesa's provisions for bad loans--a major source of costs for
Italian banks--were almost flat at EUR695 million.
The bank said it reduced its stock of bad loans by EUR7.5
billion in the last year and a half and that the inflow of bad
loans during the quarter was at its lowest level since the creation
of the bank around 10 years ago.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
May 05, 2017 08:54 ET (12:54 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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