Italian bank Intesa SanPaolo sees Q2 profits dip slightly

MILAN – Italian bank Intesa SanPaolo said Tuesday that its second-quarter profit dipped while revenue fell only slightly despite tough market conditions and a subdued economy.

Italy’s second-largest bank by assets reported that net income dropped 4 per cent to 901 million euros ($1 billion) in the three months through June, compared with a year earlier. Revenue was up to 4.61 billion euros from 4.51 billion euros.

Net fees and commission income and interest income each dipped 4 per cent to 1.8 billion euros. Trading profit rose 22 per cent.

The bank reported that its load of non-performing loans dropped 2 per cent, the third straight quarterly decrease. The loan-loss provisions rose to 923 million euros from 847 million euros a year earlier.

Intesa was one of the best-capitalized banks in the recent stress tests of EU banks. CEO Carlo Messina said Intesa SanPaolo’s capital far exceeded regulators’ requirements “even in the most adverse scenarios.”

“The EBA stress test also confirmed it is a very low-risk bank and in a rational market, should have the benefit of a lower cost of capital than our peers,” Messina told analysts, tacking on after a pause: “But I don’t know if the market is rational.”

Shares in the bank were down 3.8 per cent at 1.829 euros.

Investors have been speculating on Italian banks due to exposure to some 360 billion euros ($400 billion) in bad loans that won’t be paid back. While Intesa was among the best performers in the stress test, Italian bank Monte dei Paschi di Siena was by far the worst performer, announcing an immediate plan to dispose of bad loans and raise another 5 billion euros in capital.

Messina emphasized Intesa’s role in accelerating growth in the real economy, saying the bank increased medium- and long-term credit by 24 per cent in the first half of the year to 24 billion euros. Mortgages are up 80 per cent year-on-year, he said.