INTESA SANPAOLO:

THE RESULTS FOR THE FIRST NINE MONTHS OF 2023 CONFIRM THAT INTESA SANPAOLO IS ABLE TO GENERATE SUSTAINABLE PROFITABILITY EVEN IN COMPLEX ENVIRONMENTS THANKS TO ITS WELL-DIVERSIFIED AND RESILIENT BUSINESS MODEL, WITH NET INCOME OF €6.1 BILLION DRIVEN BY NET INTEREST INCOME AND EXPECTED TO BE ABOVE €7.5 BILLION IN FULL-YEAR 2023, WITH NET INTEREST INCOME EXPECTED TO BE WELL ABOVE €14 BILLION IN 2023 AND GROW FURTHER IN 2024 AND 2025.
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THE SOLID PERFORMANCE OF INCOME STATEMENT AND BALANCE SHEET IN 9M 2023 TRANSLATED INTO SIGNIFICANT VALUE CREATION FOR ALL STAKEHOLDERS WHICH IS ALSO GROUNDED IN THE GROUP’S STRONG ESG COMMITMENT. SPECIFICALLY, AROUND €4.3 BILLION DIVIDENDS WERE ACCRUED (AROUND €2.6 BILLION OF WHICH WILL BE DISTRIBUTED IN NOVEMBER 2023 AS INTERIM DIVIDENDS) AND €4 BILLION TAXES GENERATED (UP BY AROUND €1.1 BILLION ON 9M 2022 DUE TO GROWTH IN NET INTEREST INCOME), THE FOOD AND SHELTER PROGRAMME FOR PEOPLE IN NEED WAS EXPANDED (OVER 32 MILLION INTERVENTIONS IN THE PERIOD 2022 – 9M 2023) AND INITIATIVES WERE ENHANCED TO FIGHT INEQUALITIES AND FOSTER FINANCIAL, SOCIAL, EDUCATIONAL AND CULTURAL INCLUSION (AROUND €13.5 BILLION OF SOCIAL LENDING AND URBAN REGENERATION IN THE PERIOD 2022 – 9M 2023), AROUND €1.5 BILLION TO BE CONTRIBUTED IN 2023-2027 TO ADDRESS SOCIAL NEEDS.
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INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN 9M 2023, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €29 BILLION. IN 9M 2023, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF 2,800 COMPANIES, THUS SAFEGUARDING 14,000 JOBS. THIS BROUGHT THE TOTAL TO 140,000 COMPANIES SINCE 2014, WITH 700,000 JOBS SAFEGUARDED OVER THE SAME PERIOD.
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INTESA SANPAOLO IS FULLY EQUIPPED TO CONTINUE SUCCEEDING IN THE FUTURE GIVEN THE GROUP’S KEY STRENGTHS, NOTABLY RESILIENT PROFITABILITY, A SOLID CAPITAL POSITION, THE “ZERO-NPL” BANK STATUS AND HIGH FLEXIBILITY IN MANAGING OPERATING COSTS.
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TECHNOLOGY REPRESENTS A FURTHER KEY FACTOR TO SUCCEED, WITH THE NEW CLOUD-NATIVE TECH PLATFORM, THE DIGITAL CHANNELS OF ISYBANK AND FIDEURAM DIRECT AND ARTIFICIAL INTELLIGENT SOLUTIONS THAT ARE EXPECTED TO GENERATE ADDITIONAL CONTRIBUTION TO 2025 GROSS INCOME OF AROUND €500 MILLION, NOT ENVISAGED IN THE 2022-2025 BUSINESS PLAN.
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THE IMPLEMENTATION OF THE 2022-2025 BUSINESS PLAN IS PROCEEDING AT FULL SPEED AND THE KEY INDUSTRIAL INITIATIVES ARE WELL UNDERWAY, WITH THE PROSPECT THAT 2024 AND 2025 NET INCOME WILL BE HIGHER THAN THAT ENVISAGED FOR 2023.
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THE CAPITAL POSITION AS AT 30 SEPTEMBER 2023 WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS: FULLY LOADED COMMON EQUITY TIER 1 RATIO WAS 13.6% AFTER DEDUCTING FROM CAPITAL THE DIVIDENDS ACCRUED IN 9M 2023 AND NOT TAKING INTO ACCOUNT A BENEFIT OF AROUND 120 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 25 BASIS POINTS WITHIN THE Q4 2023 - 2025 HORIZON.
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GROSS INCOME WAS UP 67% AND OPERATING MARGIN WAS UP 36.8% ON 9M 2022, WITH OPERATING INCOME UP 19% AND OPERATING COSTS RISING SLIGHTLY (UP 0.7%).
///CREDIT QUALITY:
- NPLs WERE DOWN 5.3% NET AND 1.4% GROSS ON YEAR-END 2022;
- NPL RATIO WAS 1.2% NET AND 2.4% GROSS, RESPECTIVELY 1% AND 1.9% ACCORDING TO THE EBA METHODOLOGY;
- ANNUALISED COST OF RISK IN 9M 2023 STOOD AT 28 BASIS POINTS;
- EXPOSURE TO RUSSIA HAS BEEN FURTHER REDUCED: DOWN BY AROUND 80% SINCE JUNE 2022 AND NOW BELOW 0.2% OF THE GROUP’S TOTAL CUSTOMER LOANS.
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• NET INCOME OF €6,122M IN 9M 2023, UP 85.3% COMPARED WITH €3,303M IN 9M 2022
• GROSS INCOME UP 67% ON 9M 2022
• OPERATING MARGIN UP 36.8% ON 9M 2022
• OPERATING INCOME UP 19% ON 9M 2022
• OPERATING COSTS SLIGHTLY UP (0.7%) ON 9M 2022
• CREDIT QUALITY:
• NPL STOCK DOWN 5.3% NET AND 1.4% GROSS ON YEAR-END 2022
• NPL RATIO OF 1.2% NET AND 2.4% GROSS, RESPECTIVELY 1% AND 1.9% ACCORDING TO THE EBA METHODOLOGY
• ANNUALISED COST OF RISK IN 9M 2023 AT 28 BASIS POINTS (FROM 70 BASIS POINTS IN 2022, 30 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE EXPOSURE TO RUSSIA AND UKRAINE, FOR OVERLAYS AND TO FAVOUR DE-RISKING, NET OF THE PARTIAL RELEASE OF GENERIC PROVISIONS WHICH WERE SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS)
• A SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS:
• COMMON EQUITY TIER 1 RATIO AS AT 30 SEPTEMBER 2023, AFTER DEDUCTING FROM CAPITAL (°) AROUND €4.3BN OF DIVIDENDS ACCRUED IN 9M 2023, AT 13.6% FULLY LOADED (°°) WITHOUT TAKING INTO ACCOUNT THE BENEFIT OF AROUND 120 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs) OF WHICH AROUND 25 BASIS POINTS WITHIN THE Q4 2023 - 2025 HORIZON

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Turin - Milan, 3 November 2023 – At its meeting today, the Board of Directors of Intesa Sanpaolo approved the consolidated half-yearly report as at 30 September 2023 (*).

The results for the first nine months of 2023 confirm that the Intesa Sanpaolo Group is able to generate sustainable profitability even in complex environments thanks to its well-diversified and resilient business model, with net income of €6.1bn driven by net interest income.

The solid performance of income statement and balance sheet in the first nine months of the year translated into significant value creation for all stakeholders which is also grounded in the Group’s strong ESG commitment: specifically, around €4.3bn dividends accrued (around €2.6bn of which will be distributed in November 2023 as interim dividends) and €4bn taxes (°) generated and increased by around €1.1bn on 9M 2022 (°°) as a consequence of the net interest income growth which has driven the net income increase of around €2.8bn, expansion of the food and shelter programme for people in need (over 32 million interventions in the period 2022 – 9M 2023), enhancement of initiatives to fight inequalities and foster financial, social, educational and cultural inclusion (around €13.5bn of social lending and urban regeneration in the period 2022 – 9M 2023), an amount equal to around €1.5bn total costs to be contributed in the five-year period 2023-2027 to support initiatives addressing social needs (already included, on a pro-rata basis, in the outlook for 2023-2025 net income).

Intesa Sanpaolo is fully equipped to continue operating successfully in the future given the Group’s key strengths, notably resilient profitability, a solid capital position, the “zero-NPL” Bank status and high flexibility in managing operating costs. The exposure to Russia (^) has been further reduced: down by around 80% (€2.9bn) on end of June 2022 and now below 0.2% of the Group’s total customer loans. Cross-border loans to Russia were largely performing and classified in Stage 2.

Technology is a further key factor to succeed, generating additional contribution to 2025 gross income of around €500m, not envisaged in the 2022-2025 Business Plan (^^):
• new cloud-native technological platform (isytech), already available to mass market retail clients with the recent launch of the digital bank, Isybank, and to be progressively extended to the entire Group: around €1.8bn in IT investments already deployed and over 1,200 IT specialists already hired, with an additional contribution to 2025 gross income of around €150m, not envisaged in the Business Plan;
• new digital channels:
- the launch of Isybank successfully completed, the Group’s digital bank with a lower-than-30% cost/income business model, around 5m clients by 2025 (over 2.5m by the first quarter of 2024) and an additional contribution to gross income of around €200m by 2025, not envisaged in the Business Plan;
- the launch of Fideuram Direct successfully completed, the digital Wealth Management platform for Private Banking, with around 150,000 clients in 2025 (around 20% of the current Fideuram client base);
• artificial intelligence, with around 140 Apps and 300 specialists in 2025 and an additional contribution to 2025 gross income of around €100m, not envisaged in the Business Plan, without taking into account potential upside from the adoption of Generative AI solutions.
(*) Methodological note on the scope of consolidation on page 30.
(°) Direct and indirect taxes.
(°°) Entirely in direct taxes.
(^) On-balance credit exposure, both cross-border and at the Russian subsidiary Banca Intesa, net of guarantees by Export Credit Agencies and after adjustments. As at 30 June 2023, after adjustments, the on-balance cross-border credit exposure to Russia amounted to €0.79bn of which €0.75bn to customers, net of €0.8bn guarantees by Export Credit Agencies (no off-balance to customers and off-balance of €0.1bn to banks, net of €0.5bn guarantees by ECA) and the on-balance credit exposure of the subsidiaries amounted to €0.76bn, of which €0.14bn to customers, for Banca Intesa in Russia and €0.08bn, to banks, for Pravex Bank in Ukraine (off-balance, to customers, of €0.06bn for the Russian subsidiary and €0.04bn for the Ukrainian subsidiary). The credit exposure to Russian counterparties currently included in the SDN lists of names to which sanctions apply amounted to €0.35bn.
(^^) Additional contribution to 2025 gross income from isytech, Isybank, Fideuram Direct and Artificial Intelligence, which offsets the impact from higher inflation and the renewal of the labour contract.