Intesa Sanpaolo Q2 Profit Up 87%

(RTTNews) - Italian lender Intesa Sanpaolo S.p.A. (IITSF.PK, ISNPY.PK) on Friday reported an 87 percent surge in profit for the second quarter from last year, reflecting higher net interest income as well as net fees and commission income.

These more than offset the negative impact of a retroactive tax rate increase in relation to the company's stake in the Bank of Italy.

Intesa Sanpaolo's net income for the second quarter increased to 217 million from 116 million euros in the previous-year quarter.

The latest quarter's results were negatively impacted by taxes of 912 million euros, including 443 million euros related to the increase in the tax rate on the capital gain from the Bank of Italy stake. The company is the largest shareholder in the Bank of Italy with a nearly 42 percent stake.

The latest quarter's results also include charges for integration and exit incentives of 13 million euros, charges from purchase cost allocation of 53 million euros, loss after tax from discontinued operations of 9 million euros, and minority interests of 16 million euros.

However, net interest income for the quarter increased 3 percent to 2.10 billion euros from 2.04 billion euros in the prior-year period. Meanwhile, net fee and commission income rose 10 percent to 1.73 billion euros.

Commissions on commercial banking activities increased 8 percent from the year-ago quarter, while commissions on management, dealing and consultancy activities grew 19 percent.

Under the latter, commissions on distribution of insurance products increased 15 percent, commission on portfolio management rose 19 percent, and commissions on dealing and placement of securities grew 34 percent.

Profit on trading grew 73 percent from the year-ago period to 409 million euros.

Operating costs for the quarter rose 2 percent from the year-ago period to 2.05 billion euros, reflecting higher personnel expenses.

Operating income grew 9 percent from last year to 4.46 billion euros. Operating margin increased 19 percent, which according to the company was the higher in the past nine quarters.

Loan loss provision for the quarter was 1.18 billion euros, down from 1.40 billion euros in the same period last year.

Assets under management at quarter-end totaled 280 billion euros, up 8 percent from year-end 2013 and up 15 percent from the end of the prior-year quarter.

Looking ahead to fiscal 2014, Intesa Sanpaolo said it will continue to prioritise the delivery of sustainable results. The company will maintain its focus on the various initiatives aimed at strengthening the capital position and steadily improving the profile of risk and liquidity, as well as on profitability targets.

Intesa said its efficiency, productivity and asset quality will be addressed constantly. The company expects repricing actions to partly limit the impact of an expected negative environment on market rates.

In Milan, the company's shares are currently trading at 2.27 euros, up 0.04 euros or 1.97 percent on a volume of 171.59 million shares.