Italy’s Intesa eyes ‘substantial’ share buyback, ups 2025 profit goal

Milan: Italy’s biggest bank Intesa Sanpaolo (ISP.MI), opens new tab on Thursday promised to add a sizeable share buyback to dividend payments on its 2024 results, after it beat expectations with its third-quarter profit and upgraded its guidance for next year.

A 10% yearly rise in net fees at Intesa, whose business is geared towards wealth management and insurance services which it runs in-house, contributed to lifting net profit by more than a quarter in the July-September period from a year ago.

“Due to the results of the group, I’m really convinced that the proposal to the board could be for a significant buyback,” CEO Carlo Messina told analysts.

Intesa is awaiting full-year results before deciding on share buybacks on top of its 70% cash payout ratio.

After higher interest rates turbocharged profits in recent quarters, Italian banks are working to boost fee income to offset the waning contribution from rates as the European Central Bank cuts the cost of borrowing.

However, Intesa said it would earn more than anticipated from the gap between lending and deposit rates this year, adding net interest income (NII) would also hold up well next year.

A successful rate-hedging strategy and higher loan volumes would sustain NII in 2025, while net fees would keep growing.

As a consequence, 2025 net profit will reach around 9 billion euros, Intesa said, improving its previous estimate of a result that would match its 2024 goal of more than 8.5 billion euros.

Intesa last week stuck to the 2024 profit forecast after saying it would book significant one-off costs in the final quarter of the year to fund voluntary staff exits.

Messina said the departures showed Intesa could save through its investments in technology, without embarking on merger deals that risked to delay advances due to the need to combine two IT systems.

Crosstown rival UniCredit (CRDI.MI), opens new tab has been considering a takeover bid for Commerzbank (CBKG.DE), opens new tab after building a stake in Germany’s second-biggest bank.

Intesa’s full transition to the cloud as an IT base after the end of 2025 will drive major savings, he added.

In the three months through September, Intesa’s net profit totalled 2.4 billion euros ($2.6 billion), above a 2.3 billion euro average analyst forecast compiled by LSEG.

Shares in Intesa, the first Italian bank to report third-quarter earnings, closed broadly flat.

Shares in Intesa have gained 50% so far this year, occasionally pushing its market value past the 70 billion euro threshold and above that of European leader BNP Paribas (BNPP.PA), opens new tab, based on LSEG data.

BNP Paribas, which also reported earnings on Thursday, lost 4.8% on Thursday and is flat year-to-date.