Italy’s biggest bank promises shareholders 22 billion eurosa

Rome: Intesa Sanpaolo, Italy’s biggest bank, said Friday it would pay its shareholders 22 billion euros ($25.2 billion) between now and 2025 as part of its new strategic plan.

The bank announced a 27.7 percent increase in net profit to 4.18 billion euros in 2021, slightly above expectations although less than predicted several years ago due to the coronavirus pandemic.

For 2022, Intesa Sanpaolo expects a net profit of more than five billion euros, chief executive Carlo Messina said. The shareholder payout, in dividends and share buybacks, is equivalent to more than 40 percent of Intesa Sanpaolo’s market capitalisation and includes 6.6 billion euros in 2022.

Messina told an analysts’ call that the payout ratio — the proportion of earnings paid to shareholders — of 70 percent was “one of the highest in the banking sector in Europe and we consider it to be the right level”.

Main rival UniCredit set its own ambitious target in December of paying out at least 16 billion euros to shareholders by 2024. That same month, the European Banking Authority (EBA) urged banks not to be “overly generous”, even those with “comfortable” liquidity positions, in case the economic outlook worsened.

At the start of the pandemic in early 2020, the European Central Bank asked banks in the eurozone to suspend dividends and share buybacks, but this recommendation was lifted last summer.

As a result, European companies are expected to pay out a total of 410 billion euros to shareholders this year, a new record after the 378 billion in 2021, according to a report last month from AllianzGI.

Messina insisted the strategic plan took a long-term approach and was “prudent and conservative”. After a takeover of Ubi Banca in 2020, the chief executive said Intesa Sanpaolo would be cautious on mergers and acquisitions in the years to come.

It expects to increase revenues by 2.3 percent a year to reach 22.8 billion euros in 2025, when net profit is expected to reach 6.5 billion euros. The bank is planning 9,200 voluntary departures by 2025 — 2,850 already having occurred in 2021 — and 4,600 hires.