FINANCIALS: ISPIM: Results Positive, Guidance Upgraded, Spread Supportive

Intesa Sanpaolo (ISPIM: Baa1/BBB/BBB) 2Q24 results are positive with good loan losses, NPLs, CET1 and a 10% pre-tax profit beat. Russian exposure was shrunk again. Guidance for FY24 earnings is upgraded; there is an allusion to additional equity payout to be announced in Feb-25. Spreads have done reasonably well in the last month (-10bp vs. €IG banks -3bp) but, even with the “additional distributions” comment, we see these positives as spread positive.

• Credit stats: loan losses have come in 13% better than expectations (at 30bp of loans, from 22bp in 1Q24) and gross non-performers (EBA) are reported 10bp better than Mar-24 (at 2.0%). CET1 is 13.5% (10bp better than consensus) and the potential future uplift from DTA absorption has been positively to 120bp (from 100bp at Mar-24).
• Revenues are 3% ahead, driven by NII and the main banking lines, only insurance underperforming. Costs were around 4% better, helping drive the 10% pre-tax profit beat.
• Russian exposure has shrunk again, to just 0.1% of lending (from 0.5% at Mar-24). Guidance is being lifted to FY24 earnings of >EUR8.5bn (from >EUR8bn) and new guidance indicates EUR15.5bn of NII, 4% above current consensus, which the equity market will likely enjoy, alongside a new comment above “additional distributions” to be quantified with FY24 results in Feb-25.

Conf call is 1400 (London time) at: https://edge.media-server.com/mmc/p/oqutkb6w/