Intesa Sanpaolo Earnings: Exceptional Results and Elevated Full-Year Guidance, Although Too Cautious

Intesa Sanpaolo continues to deliver exceptional results, with the second quarter of 2024 contributing to its best six months in history. Net revenue grew by 8% in the second quarter compared with the same period last year, with net income increasing by 12%. Intesa will, however, face a more challenging base from the next quarter, with net interest margin expansion having peaked. The bank kept a tight lid on costs, resulting in a slight decline in operating expenses and a lower cost/income ratio of 38%. Credit quality remains sound, and Intesa recorded its lowest-ever nonperforming loan ratio of 1%. It generated substantial excess capital, which we expect the firm to distribute to shareholders through dividends and share buybacks over time. Intesa's options to meaningfully return excess capital are unclear in the near term. It expects the total payout to be somewhat higher than in 2023. Intesa is well positioned for the changing economic cycle and is on track to achieve its 2025 targets. We maintain our fair value estimate of EUR 3.50 per share.