MILAN- Intesa Sanpaolo, which just sealed a takeover of smaller rival UBI, said it would seek clearance to return more cash to shareholders next year via dividends after second-quarter profits beat expectations.
Intesa has just snapped up UBI, Italy's healthiest second-tier rival, after a tortuous takeover battle, aiming to drive profits through cost cuts and a focus on wealth management and insurance.
Intesa confirmed a 2022 profit goal of at least 5 billion euros ($6 billion) for the merged group, which will be the euro zone's eighth-largest bank by assets and will command at least a fifth of all main banking products domestically.
It will present a new business plan for the new group by the end of next year, waiting first for a clearer macroeconomic picture.
Even without a contribution from UBI, Intesa stuck to a 2020 profit goal of at least 3 billion euros, rising to at least 3.5 billion euros in 2021.
"In terms of guidance and outlook, we believe it is very much a case of no news is good news," Santander analysts said in a note. "In a quarter when other banks have disappointed with weaker performance because of COVID-19, we believe Intesa's results were reassuring."
Shares in the bank extended gains after the results, rising 4.1% by 1234 GMT.
Net profit for the three months through June came in at 1.4 billion euros ($1.7 billion), up 16% year-on-year and above an average 1.1 billion euro forecast in a Reuters analyst survey.
Earnings benefited from a 1.1 billion euro capital gain Intesa booked in the quarter from the sale of its retailers' payments business to Nexi.
The bank used that gain to write down loans by 1.4 billion euros in an economy ravaged by the fallout of the coronavirus pandemic. Intesa raised provisions on loans which are currently performing but may deteriorate as debt holidays and other government support measures wane.
Following a dividend freeze demanded by the European Central Bank to help banks to cope with the virus crisis, Intesa said it would seek ECB approval to pay out as dividends in 2021 part of its net income from both 2020 and 2019.
Core capital, one of the highest in Italy, strengthened further to 14.9% of assets at the end of June from 14.5% three months earlier.
Intesa said its net interest income, a measure of how much money a bank makes from its traditional lending business, declined only fractionally in the period from the previous year. Fees however dropped 11% in a quarter impacted by a prolonged lockdown.
Revenues totalled 4.1 billion euros, in line with analyst forecasts.(($1 = 0.8498 euros)
(Reporting by Valentina Za, editing by Silvia Aloisi and Jane Merriman) ((email@example.com; +39 02 6612 9526;))