Italy's Intesa eyes higher dividend in 2021 after UBI buy

Credit: REUTERS/STEFANO RELLANDINI

Italy's Intesa Sanpaolo, which just sealed a deal to buy smaller rival UBI, said it will ask the European Central Bank to let it return more cash to shareholders next year after profits beat expectations in the second quarter.

By Valentina Za

MILAN, Aug 4 (Reuters) - Italy's Intesa Sanpaolo ISP.MI, which just sealed a deal to buy smaller rival UBI UBI.MI, said it will ask the European Central Bank to let it return more cash to shareholders next year after profits beat expectations in the second quarter.

Intesa confirmed a 2022 profit goal of at least 5 billion euros ($6 billion) for the merged group, which will be the euro zone's eighth-largest by assets.

It said it would wait for a clearer macroeconomic picture before presenting a new business plan which it intends to disclose before the end of next year.

Even without the contribution from UBI, Intesa stuck to a 2020 profit goal of at least 3 billion euros, rising to at least 3.5 billion euros in 2021. Shares in the bank extended gains after the results, rising 4.1% by 1137 GMT.

Intesa last week won a tortuous takeover battle for UBI, snapping up Italy's healthiest second tier peer to drive profits through cost cuts and a focus on wealth management and insurance.

Intesa says the deal, Europe's biggest banking merger in a decade, will allow the group to play a bigger role in the region where industry regulators are pushing for consolidation.

Net profit for the three months through June came in at 1.4 billion euros ($1.7 billion), up 16% year-on-year andabove an average 1.1 billion euro forecast in a Reuters survey of six analysts.

Earnings were helped by a 1.1 billion euro capital gain Intesa booked in the quarter from the sale of its retailers' payments business to Nexi <NEXII.MI>. Intesa used that gain to increase provisions against loan losses by 1.4 billion euros in an economy ravaged by the fallout of the coronavirus pandemic.

Intesa said its net interest income, a measure of how much money a bank makes from its traditional lending business, declined only fractionally in the quarter versus the previous year. Fees however dropped 11% in a quarter impacted by a prolonged lockdown.

Revenues totalled 4.1 billion euros, in line with analyst forecasts.

(($1 = 0.8498 euros)

(Reporting by Valentina Za, editing by Silvia Aloisi)

((valentina.za@thomsonreuters.com; +39 02 6612 9526;))

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