Intesa Sanpaolo, here is the new Messina plan
All the details on Intesa Sanpaolo's new business plan to 2025 presented by the CEO Carlo Messina
Intesa Sanpaolo focuses on digitalization in the new business plan to 2025.
THE NUMBERS OF INTESA SANPAOLO'S NEW BUSINESS PLAN
During the plan, the bank plans investments for 7.1 billion euros, of which 5 billion for technology and growth, including around 650 million in the new Digital Bank to create a more efficient platform with which billions of costs for a structural cut are already costs of about 0.8 billion per year when fully operational (2026-2027), the structural cost reduction will be over 0.6 billion possible by technology.
THE NEW DIGITAL BANK
The new Digital Bank is designed to serve retail customers who do not need the branches and to reduce the cost of the service: it is aimed at approximately 4 million Intesa Sanpaolo customers who have not already used the branches and generate approximately 200 million revenues with a cost / income higher than 100%.
THE ROLE OF TECHNOLOGY
The technology is cutting-edge, cloud-native adaptable to multi-currency and multinational clients, working in partnership with the fintech Thought Machine. The creation of Ai Lab in Turin is also planned with about 50 Italian and international professionals for the development of new data analysis methodologies and advanced solutions in Artificial Intelligence. The technological infrastructure will then be extended to the entire group, including the international network.
WHAT MESSINA, COMPANY HEAD OF INTESA SANPAOLO, SAID
The new business plan, explained the CEO of Intesa Sanpaolo, Carlo Messina, "projects the bank over the next ten years through four pillars". The first, continued the manager, is the "massive upfront derisking plan that will lead us to become a Nordic bank with zero impaired loans, one of the best in Europe, while the second concerns the reduction of structural costs" thanks also to the creation of a digital multichannel bank and after having invested “heavily in technology”. Intesa intends to create an Artificial Intelligence pole in Turin where about fifty people will be hired.
THE PILLARS OF THE INTESA SANPAOLO PLAN
The third pillar focuses on “commission growth thanks to the recovery plan and advisory in the wealth management and insurance sector. The fourth point is sustainability ". The bank intends to achieve the goal of zero net emissions by 2030. The CEO Messina then underlined that "the growth of cash dividends remains a priority with objectives that will be reviewed year by year". Furthermore, the 6.5 billion net profit expected by 2025 could rise to 8 billion in the event of a 1% rate hike over the plan.
THE NEW INDUSTRIAL PLAN OF INTESA SANPAOLO
Intesa Sanpaolo's new business plan 2022-2025 provides for over 22 billion in cash dividends with a payout ratio of 70% per year and a buyback of 3.4 billion in 2022. Net operating income (revenues) is seen to increase at € 22.8 billion in 2025 from 20.8 billion in 2021 (+ 2.3% CAGR), net commissions up to 11.1 billion in 2025 from 9.5 billion in 2021 (+ 3.9% CAGR) ), with an amount of assets under management growing by approximately 100 billion to 574 billion from 474 billion (+ 4.9% CAGR), a result of the insurance business increasing to 1.9 billion in 2025 from 1.6 billion in 2021 (+ 3.3% CAGR), driven by the development of the non-life sector with an increase in premiums of 0.9 billion to 2.3 billion from 1.4 billion.
PROFITABILITY CHAPTER
The profitability of the share (Rote) is expected to increase to 13.9% in 2025 from 9.1% in 2021, while Roe, on the other hand, will increase to 11.6% in 2025 from 7.6% in 2021 compared to a net result growing to 6.5 billion euros in 2025 from 4.2 billion in 2021 (+ 11.8% compound annual growth, CAGR), a distribution for 2021-2025 of over 22 billion euros , of which over 6.6 billion in 2022 (including 1.4 billion of interim dividends in 2021 paid in November 2021 and interim dividend in 2022 to be paid in November 2022) from cash dividends with payout ratio of 70 % and a 3.4 billion buyback in 2022.
BALANCE SHEET
In terms of capital strength, expectations are for a fully phased-in Common Equity Tier 1 ratio of over 12% in 2022-2025 according to the Basel 3 / Basel 4 rules, a fully phased-in leverage ratio of 6.2 % in 2025 compared to 5.6% in 2021 and a Liquidity Coverage Ratio of around 125% in 2025 with a Net Stable Funding Ratio of around 115% in 2025.
THE JUDGMENT OF THE ANALYSTS
After the presentation of the new Intesa Sanpaolo business piano , the attention of financial analysts focuses on the issue of dividends. The main objective is the commitment to reach excess capital above 12% Cet1, which implies a return on capital of over 22 billion euros between dividends and buybacks in the period 2021-2025. 42% of Intesa's market capital in total by 2025, which implies one of the highest returns among EU banks ”, highlights a report by Morgan Stanley. The main objectives of the new piano are "largely in line with the consensus", highlight the analysts of Kbw. For Bestinver, the positive surprise is that part of the payout is a "one-time buyback of 3.4 billion euros to be made in 2022". For Equita, the targets of the piano are ”consistent with our expectations. Remuneration to shareholders is expected to be 21 billion over the course of the plan, with 3.4 billion in repurchases by 2022 ″. In the new plan Santander analysts see a “significant return on capital. Intesa Sanpaolo intends to return at least € 22 billion of capital to shareholders in the period 2021-2025. This would amount to € 4.4 billion on average per year. Whether you consider the calendar year or accounting year, the total annual return is likely to be higher than the implied average of the total of 22 billion ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/intesa-sanpaolo-ecco-il-nuovo-piano-di-messina/ on Fri, 04 Feb 2022 11:54:23 +0000.