ISP Intesa Sanpaolo Spa

   By Cristina Roca 
 

Intesa Sanpaolo SpA is betting that a digital push will help it reach higher earnings and profitability, and plans to return 22 billion euros ($25.16 billion) to shareholders between 2021 and 2025 as part of its new business plan.

Italy's largest bank by assets said Friday that it expects its net profit to grow to EUR6.5 billion in 2025. It posted a EUR4.19 billion net profit in 2021.

Intesa will also aim for its return on tangible equity--a key metric of profitability--to go up to 13.9% in 2025 from 9.1% in 2021.

The bank plans to invest EUR7.1 billion over the next four years. A large chunk of this will be spent on technology, including a new digital bank, which Intesa said would make it cheaper to service retail clients. It will make 4.600 new hires and reskill or redeploy around 8,000 employees, it said.

Intesa said bolstering its technological capabilities would help it achieve EUR2 billion in cost savings over 2022-25 and a cost-to-income ratio of 46.4% in 2025.

Intesa said it will also implement a "massive" derisking by dumping more non-performing loans over the coming years as it seeks to eventually become a "zero-NPL" bank.

It plans to drive growth by doubling down on its wealth management, insurance and advisory proposition, it said.

The bank's capital distribution plan will consist of cash dividends with a payout ratio of 70%--the same as its current policy--plus a EUR3.4 billion buyback in 2022, it said.

For 2021, Intesa will pay EUR1.5 billion in dividends, adding to an interim dividend paid in November.

In the last quarter of 2021, Intesa posted a net profit of EUR179 million compared with a EUR3.1 billion loss a year earlier, when it booked large charges related to the acquisition of smaller peer UBI Banca. Its earnings were also weighed down by a number of one-off costs relating to deleveraging and a plan to shed 2,000 jobs, UBS analysts noted.

Quarterly operating income fell 1.4% to EUR5.02 billion, driven by a 5.7% decline in net interest income even as income from fees improved.

Write to Cristina Roca at cristina.roca@wsj.com

(END) Dow Jones Newswires

February 04, 2022 04:57 ET (09:57 GMT)

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