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Intesa Sanpaolo: consolidated results as at December 31st 2014

Turin - Milan, February 12th 2015 – At its meeting today, the Intesa Sanpaolo Management Board approved the parent company and consolidated results for the year ended December 31st 2014.

The Group has achieved a strong improvement in profitability - above the 2014-2017 Business Plan targets - despite prolonged market challenges, confirming that its balance sheet is solid, as the figures below show:

Proposed cash dividends of €1.2bn: €7 cents per ordinary share and €8.1 cents per savings share. dividend yield (1) of 2.8% per ordinary share and 3.7% per savings share.

Robust net income:

  • €1,690m in 2014, excluding the retroactive tax rate increase relating to the bank of italy stake, up 38.8% vs €1,218m in 2013, excluding the impairment of goodwill and other intangible assets
  • stated income at €1,251m in 2014, despite an effective tax rate of 52%
  • €48m in q4 2014

Strong growth in pre-tax income:

  •  up 36.5% vs 2013

Significant increase in core operating margin:

  • up 11.6% vs 2013, excluding profits on trading

Positive trend in net interest income:

  • up 3.3% vs 2013

Sustained growth in net fees and commissions:

  • up 10.5% vs 2013

Continuous cost management with operating costs

  • up 3% vs 2013, an increase entirely due to incentives to trigger growth that were not paid in 2013

Reduction in provisions, reflecting an improving credit trend. provisions included adjustments due to the outcome of the AQR:

  • loan loss provisions of €4,538m in 2014 vs 7,111m in 2013 (down 36.2%) 
  • NPL inflow from performing loans in 2014 at its lowest since 2011, down 22% net and 21% gross vs 2013

A further strengthening of a strong capital base which is well above regulatory requirements. the common equity ratio, net of €1.2bn dividends accrued in 2014, is:

  • 13.6% on a transitional basis for 2014 (2) (“phased in”) 
  • 13.3% on a fully loaded basis (3)

HIGHLIGHTS:

OPERATING INCOME:

FY 2014
+4% at €16,898m vs €16,248m in 2013

Q4 2014
-1.9% at €4,127m vs €4,206m in q3 2014

OPERATING COSTS:

FY 2014
+3% at €8,544m vs €8,298m in 2013

Q4 2014
+13.5% at €2,346m vs €2,067m in q3 2014

OPERATING MARGIN:

FY 2014
+5.1% at €8,354m vs €7,950m in 2013;

Q4 2014
-16.7% at €1,781m vs €2,139m in q3 2014

INCOME BEFORE TAX FROM CONTINUING OPERATIONS:

FY 2014
+36.5% at €3,435m vs €2,516m in 2013;

Q4 2014
-57.9% at €374m vs €888m in q3 2014

NET INCOME:

FY 2014

  • €1,251m vs -€4,550m in 2013 
  • €1,690m excluding the retroactive tax rate increase relating to the bank of italy stake, vs €1,218m in 2013 excluding goodwill/intangibles impairment;

Q4 2014
€48m vs €483m in q3 2014

CAPITAL RATIOS: common equity ratio after accrued dividends

  • 13.3% pro-forma fully loaded (4); 
  • 13.6% phased in (5)

Commenting on Intesa Sanpaolo’s full-year financial results for 2014, Carlo Messina, Chief Executive Officer, stated: “Our solid 2014 results exceed the objectives set by the 2014-2017 Business Plan. With an actual net income of €1.7 billion, up 39% compared to last year, Intesa Sanpaolo is clearly delivering on its promises.

“The significant improvement across all of our main financial indicators puts us at the top of the European rankings in terms of both revenue and operating margin growth, and capital position. Significantly, growth in net fee and commission income exceeded 10% and our common equity increased to more than 13%. We have also maintained a strong liquidity position and a leverage ratio that is best in class.

“This noteworthy performance benefits all of Intesa Sanpaolo’s stakeholders:

  • Shareholders with €1.2 billion in dividends;
  • Households and businesses with €34 billion disbursement in medium and long term credit, thus financing thousands of new investments;
  • Employees with €5.1 billion in payroll and performance results that enabled us to redeploy an excess capacity of 4,500 people; and
  • The State with €2.7 billion in taxes paid.

“These results are rooted in the hard work of our people: they are the key factor in delivering Intesa Sanpaolo’s Business Plan and I wish to thank them personally.

“In 2015, we expect a further increase in revenues and operating margin, as well as a significant reduction in the cost of risk; the objective of a dividend of €2 billion is fully confirmed. We will continue to significantly extend credit to families and businesses: €42 billion disbursement in medium and long term credit is our contribution to relaunching the real economy. We are seeing the first signs of a recovery in Italy and, thanks to the Expo in Milan, we believe that current GDP growth forecasts could be exceeded.”

(1) At the Intesa Sanpaolo stock price on February 9th 2015.
(2) Includes the net income for 2014 after the deduction of accrued dividends; excluding it, the Phased-in Common Equity ratio is equal to 13.5%.
(3) Estimated applying the parameters set out under fully loaded Basel 3 to the financial statements as at December 31st 2014 considering the total absorption of deferred tax assets (DTAs) related to the goodwill realignment, the expected absorption of DTAs on losses carried forward, and the effect of the Danish compromise (under which insurance investments are risk weighted instead of being deducted from capital, with a benefit of nine basis points).
(4) Estimated by applying the parameters set out under fully loaded Basel 3 to the financial statements as at December 31st 2014, considering the total absorption of deferred tax assets (DTAs) related to the goodwill realignment, the expected absorption of DTAs on losses carried forward, and the effect of the Danish compromise (under which insurance investments are risk weighted instead of being deducted from capital, with a benefit of nine basis points).
(5) Includes the net income for 2014 after the deduction of accrued dividends; excluding it, the Phased-in Common Equity ratio is equal to 13.5%.

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