Intesa Sanpaolo (OTC:ISNPY), the Italian banking institution, has revised its 2023 outlook upwards following a surge in Q3 earnings. The bank now anticipates a net income exceeding EUR7.5 billion ($7.97 billion) for 2023, up from the initial estimate of over EUR7 billion. This optimistic outlook is based on an expected net interest income of over EUR14 billion, a significant increase underpinned by a 60% year-on-year rise in net interest income in Q3.
In the first three quarters of 2023, Intesa Sanpaolo's net interest income rose by 66% to EUR10.6 billion. Despite a slight dip in Q3 net income to EUR1.9 billion from EUR2.27 billion in Q2, the bank's operating income grew by 27% to EUR6.37 billion, outperforming FactSet analysts' predictions who had expected a quarterly revenue of EUR6.25 billion and a net profit of EUR1.77 billion.
The bank's board approved a consolidated interim report that showed a net profit increase to EUR6.1 billion from EUR3.3 billion last year. This increase was primarily driven by net interest alongside an interim cash dividend of EUR2.6 billion, equating to EUR0.1440 per share from 2023 results.
However, the bank reported a decrease in net fees and commissions by 3.7% to EUR6.44 billion during the same period. On the other hand, gross current income and operating income saw increases of 67% and 37% respectively, with net operating income also witnessing an uptick.
The report also highlighted that the stock of impaired loans decreased by 5.3% net of adjustments and 1.4% gross, with the ratio of impaired loans to total loans at 1.2% net and 2.4% gross as per EBA methodology. After deducting about EUR4.3 billion in dividends accrued in the first nine months, the bank's fully loaded Common Equity Tier 1 ratio stood at a healthy 13.6 percent, leading to the bank's stock trading 2.3 percent higher.
InvestingPro Insights
Intesa Sanpaolo's (ISP) recent performance is backed by robust metrics, as evidenced by InvestingPro data. The bank's market cap stands at a substantial 49,914.95M USD, with a P/E Ratio of 7.78, indicating a potentially undervalued stock. The revenue growth, which has been a key driver of the bank's success, is reflected in a remarkable 20.76% increase in the last twelve months as of Q2 2023.
Two InvestingPro Tips also provide valuable insights into the bank's performance. Firstly, ISP's high earnings quality is demonstrated through its free cash flow exceeding net income. Additionally, the aggressive share buyback by management is a strong indication of their confidence in the bank's future prospects.
With over 100 additional tips available on InvestingPro, investors can gain a comprehensive understanding of the bank's performance and potential.
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