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MILAN (Reuters) – Italy’s top bank Intesa Sanpaolo (OTC:ISNPY) raised its full-year profit estimate after stronger-than-forecast second-quarter earnings, and said it planned to return 3.3 billion euros ($3.9 billion) to shareholders later this year.
Intesa, which last year secured a fifth of Italy’s banking market by taking over rival UBI, has along with other lenders across Europe reported shrinking charges against loan losses and rebounding net fees as the coronavirus crisis eases.
With COVID-related payout curbs due to end on Sept. 30, Intesa said it would distribute cash reserves of 1.9 billion euros from 2020 results, after paying 694 million euros in dividends in May.
The bank, which is committed to a generous payout policy, also plans, for the first time, to pay an interim dividend of 1.4 billion euros in November on 2021 earnings, subject to discussions with regulators.
Analysts calculated that the fourth quarter’s earnings distribution, among “the highest in the sector” according to Citi, implies a yield of more than 7%.
Intesa revised its full-year profit guidance to at least 4 billion euros from well above 3.5 billion euros. Its net profit of 1.5 billion euros in the three months through June beat a 903 million euro average analyst forecast in a Reuters poll.
The bank booked a 460 million euro one-off gain in the quarter linked to a fiscal effect on intangible assets.
Total revenue of 5.2 billion euros in the period also beat a Reuters consensus estimate of 4.94 billion euros, up from a year earlier though below the first-quarter due to a boost from trading.
“Overall, sound numbers, with no obvious area of concern, and with earnings risks leaning to the upside,” UBS analysts said.
Net fees rose 18% from the second quarter of 2020, the worst affected by Italy’s coronavirus crisis.
Funds borrowed at negative rates from the European Central Bank drove the net interest margin, or income from banks’ core lending business, higher in the period versus the first quarter.
Loan writedowns stood at 599 million euros, less than half the year ago figure, with gross impaired loans falling to 4.1% of total lending from 4.4% at the end of March.
($1 = 0.8417 euros)
