Intesa Sanpaolo Cuts Dividend Guidance for Year but Confirms EUR10 Billion 2014-17 Payout -- Update
February 03 2017 - 10:40AM
Dow Jones News
By Giovanni Legorano
ROME--Italian bank Intesa Sanpaolo SpA on Friday cut its
guidance on the dividend it aims to pay for this year, but
confirmed it would distribute 3 billion euros ($3.23 billion) in
dividends for last year, after it reported a rise in both its
fourth-quarter and full-year net profit.
Intesa Chief Executive Carlo Messina said the bank planned to
pay EUR3.4 billion in dividends for 2016 because of the challenging
market environment, while last year it had said it aimed to pay
EUR4 billion.
"I decided to take a more conservative approach and would prefer
to over-deliver in an environment like this," Mr. Messina told
analysts.
Still, Intesa also confirmed its target of a total dividend
payout of EUR10 billion over the period of 2014 to 2017.
The bank 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% to 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
3.4% at EUR2.25.
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 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 put a takeover
offer on the table.
"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,"
Mr. Messina said after the release of the fourth-quarter results.
He told analysts the bank was still assessing whether a tie-up with
Generali fits with Intesa's strategic priorities.
Apart from the one-off charges, which analysts said would 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 continued 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.
The bank also said it had agreed to sell 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 could own in the central bank.
Write to Giovanni Legorano at Giovanni.Legorano@wsj.com
(END) Dow Jones Newswires
February 03, 2017 11:25 ET (16:25 GMT)
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