💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

UPDATE 2-Intesa says won't need cap hike to meet Basel III

Published 11/09/2010, 12:41 PM
Updated 11/09/2010, 12:44 PM

* Q3 net 510 million euros vs I/B/E/S forecast 543 mln euros

* Basel III to hit capital ratios by 68 bps, below forecasts

* Bank expects 2010 net profit to be better than 2009

* Shares up 1.2 percent, in line with sector

(Adds comments by CEO, analyst; updates shares)

By Lisa Jucca and Gianluca Semeraro

MILAN, Nov 9 (Reuters) - Italian bank Intesa Sanpaolo SpA does not need a capital increase to meet the new Basel III rules, it said on Tuesday, after predicting the new requirements would hit its capital base less than analysts' expectations.

Earlier Italy's second-biggest listed bank posted a third-quarter net profit which was slightly below analysts' forecasts but improved on an exceptionally strong second quarter on a underlying basis and said its profit for the year would be above 2009.

The bank said it expected fully phased-in Basel III capital rules to hit its core Tier 1 ratio by around 68 basis points, below market expectations for around 100 basis points.

"We believe complying with Basel III requirements will be very manageable for us," Chief Executive Officer Corrado Passera told an analyst conference call.

"We are confident that we will be able to meet (the new rules) without recurring to any new capital management measure beside what already agreed," he said.

Intesa Sanpaolo, Italy's biggest retail lender, said its third-quarter net income reached 510 million euros ($709.6 million) versus an average estimate of 543 million from eight analysts polled by Thomson Reuters I/B/E/S.

That compares with a net profit of around 1 billion euros the previous quarter, a total which was boosted by a one-off disposal gain.

Higher taxes and other non-recurring items contributed to pushing net income lower in the third quarter, which is traditionally slow as it bridges the summer break.

Pretax income was up around 33 percent on the previous quarter.

CAPITAL RATIOS

Intesa said its core Tier 1 ratio stood at 7.7 percent at the end of September, flat from the end of June despite some acquisitions, and Passera said he was comfortable about the bank's capital and liquidity position in view of Basel III.

"Management has provided some welcome guidance on the impact of Basel III regulations," said Andrew Lim, head of financial research at fund management and investment banking group Matrix, who had seen an impact of 185 basis points.

Lim said, however, that Intesa's assumptions would result in a Core Tier 1 ratio of 8.65 percent at the end of 2012.

"This is still some way below the best capitalised commercial banks (i.e. the Nordics, Lloyds and Standard Chartered) and importantly, is below a possible too-big-to-fail regulatory minimum of 10 percent," he added.

Several banks across Europe have started to tap investors for fresh equity as they rush to meet looming tighter capital requirements under the Basel III rules.

Intesa Sanpaolo, which emerged almost unscathed from the global credit crisis, did not have to resort to a capital hike to boost its capital base and does not believe it will tap investors, even as it plans to add a new country to its existing network in central and eastern Europe.

Passera confirmed on Tuesday he was looking at Poland's Polbank, which is up for sale, and would decide in the next few days whether to go ahead with an acquisition.

Shares in Intesa Sanpaolo were up 1.2 percent at 1538 GMT, in line with the STOXX Europe 600 banking index. (Editing by David Holmes) ($1=.7187 Euro)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.