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Intesa Sanpaolo Q2 profit soars on state aid boost

Intesa Sanpaolo SpA reported a year-over-year surge in second-quarter and first-half profits, thanks to a €3.5 billion cash contribution it received from the state to offset the capital ratio impact of its acquisition of certain assets and liabilities of Veneto Banca SpA and Banca Popolare di Vicenza SpA.

The Italian lender reported second-quarter net income of €4.34 billion, compared with €901 million in the same period a year ago. Excluding the €3.5 billion contribution from the state, net income amounted to €837 million in the second quarter.

Net interest income ticked down to €1.82 billion from €1.83 billion in the second quarter of 2016. Net fee and commission income rose over the same period to €1.90 billion from €1.86 billion.

Net adjustments to loans narrowed on a yearly basis to €737 million from €923 million. Net provisions and net impairment losses on other assets also declined, to €57 million from €194 million.

Intesa Sanpaolo booked €3.62 billion in other income during the second quarter, compared with just €196 million in the year-ago period, on the back of the public cash contribution.

The bank booked first-half net income of €5.24 billion, up from €1.71 billion in the year-ago period, as other income surged to €3.81 billion from €201 million. Excluding the contribution, Intesa Sanpaolo's first-half net income amounted to €1.74 billion.

The nonperforming loan cash coverage ratio stood at 49.1% as of June 30, against 48.8% as of Dec. 31, 2016. The cash coverage ratio for the bad loan component ticked up over the same period to 60.7% from 60.6%.

The bank's pro forma fully loaded common equity Tier 1 ratio stood at 13% as of June 30, compared with 12.9% at 2016-end. The transitional CET1 ratio stood at 12.5% at June-end, down from 12.7% at the end of 2016.

The bank's June-end leverage ratio was 6.4% on a transitional basis and 6.1% on a fully loaded basis.

Intesa said it will book a net capital gain of about €800 million from the disposal of Allfunds Bank SA in the second half.