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Intesa Sanpaolo: consolidated results as at march 31st 2015

Turin - Milan, May 18th 2015 – At its meeting, the Intesa Sanpaolo Management Board approved the consolidated interim statement as at March 31st 2015.

Strong profitability growth, above the bank’s 2014-2017 business plan targets.

A strong capital base which is well above regulatory requirements: the pro-forma common equity ratio on a fully loaded basis is 13.2%, net of accrued dividends.

Net income for Q1 2015 was over €1bn.

Net fee and commission income grew at a sustained pace (the highest yearly growth since the creation of Intesa Sanpaolo), while assets under management performed strongly.

Provisions were reduced, reflecting an improving credit trend.

Quarterly NPL inflow from performing loans was at its lowest since Q1 2011.

Intesa Sanpaolo operates as an accelerator for the growth of the real economy in Italy. The bank granted €8bn of medium/long-term new lending to italian families and businesses and helped 3,500 companies get back to performing status in the quarter.

  • Net income in Q1 2015 above 50% of dividend commitment for 2015, the highest quarterly net income since Q1 2009:
    €1,064m vs €48m in Q4 2014 and €503m in Q1 2014
  • Strong growth in pre-tax income, the highest quarterly figure since Q2 2008:
    €1,785m vs €374m in Q4 2014 and €953m in Q1 2014
  • Significant increase in operating margin, the highest quarterly figure since Q2 2007:
    €2,647m, up 48.6% vs Q4 2014 and up 30.9% vs Q1 2014
  • Sustained growth in net fees and commissions:
    €1,812m, in line with Q4 2014 and up 14.7% vs Q1 2014
  • Continuous cost management:
    operating costs at €2,106m, down 10.2% vs Q4 2014 and up 1% vs Q1 2014
  • Reduction in provisions, reflecting an improving credit trend, coupled with increase in coverage:
    - loan loss provisions in Q1 2015 at their lowest level since Q3 2011: €755m vs €1,034m in Q4 2014 (down 27%) and €1,077m in Q1 2014 (down 29.9%);
    - NPL inflow from performing loans in Q1 2015 at its lowest since Q1 2011, down 52% net and 32% gross vs Q4 2014 and down 21% net and 20% gross vs Q1 2014;
    - NPL cash coverage ratio increased to 47% (46.8% at year-end 2014).
  • A strong capital base which is well above regulatory requirements. The common equity ratio, net of €500m dividends accrued in Q1 2015, is:
    - 13.2% on a transitional basis for 2015 (1) («phased in»)
    - 13.2% on a fully loaded basis (2)

HIGHLIGHTS:

OPERATING INCOME:

+15.7% at €4,753m vs €4,108m in Q1 2014;
+15.2% vs €4,127m in Q4 2014

OPERATING COSTS:

+1% at €2,106m vs €2,086m in Q1 2014;
-10.2% vs €2,346m in Q4 2014

OPERATING MARGIN:

+30.9% at €2,647m vs €2,022m in Q1 2014;
+48.6% vs €1,781m in Q4 2014

INCOME BEFORE TAX FROM CONTINUING OPERATIONS:

+87.3% at €1,785m vs €953m in Q1 2014;
vs €374m in Q4 2014

NET INCOME

€1,064m vs €503m in Q1 2014
vs €48m in Q4 2014

CAPITAL RATIOS

COMMON EQUITY RATIO AFTER ACCRUED DIVIDENDS:

13.2% pro-forma fully loaded (3);
13.2% phased in (4)

Commenting on Intesa Sanpaolo’s first quarter 2015 financial results, Carlo Messina, Chief Executive Officer, stated:

«The excellent results of the first quarter provide a strong start to the year and reflect the role that Intesa Sanpaolo is playing in Italy's recovery. This performance places our Group at the top of the European rankings for revenue growth and capital solidity. The merit goes to all of our people, each of whom is successfully pursuing their individual business plan.

2015 is the year of change for the Italian economy: following years of GDP decline, we finally see prospects for growth. In this context, Intesa Sanpaolo is an accelerator of the recovery, providing concrete support to the real economy with more than €8 billion in new medium- and long-term credit to Italian families and businesses.

Our net income in the quarter grew 112% to €1.1 billion, taking us more than half way to our cash dividend target of €2 billion for the year.
Our investment in our people exceeded €1.3 billion in salaries and also included our commitment to training and service innovation that enabled us to redeploy 4,500 employees inside the Bank and avoid potential job losses.

The commitment we feel to the Nation is shown concretely by the €800 million paid in taxes during the quarter, by the €1.5 billion provided to support the social sector and in the role we are playing as part of EXPO 2015, where we are the Global Financial Partner and an important participant thanks to our exhibition space.

A month ago in Turin we inaugurated our new skyscraper that serves as the heart of the Bank's digital and innovation programme.

We are demonstrating that Intesa Sanpaolo, as a Real Economy Bank and with the hard work to our people, is a delivery machine that provides high and sustainable returns».

(1) Includes Q1 2015 net income after the deduction of accrued dividends; Phased-in Common Equity ratio at 13% not considering Q1 2015 net income after pro quota dividends.
(2) Estimated applying the fully loaded parameters to the financial statements as at March 31st 2015 considering the total absorption of deferred tax assets (DTAs) related to the goodwill realignment, the expected absorption of DTAs on losses carried forward, the expected distribution of Q1 2015 net income of insurance companies, and the effect of the Danish compromise (under which insurance investments are risk weighted instead of being deducted from capital, with a benefit of 13 basis points).
(3) Estimated by applying the fully loaded parameters to the financial statements as at March 31st 2015, considering the total absorption of deferred tax assets (DTAs) related to the goodwill realignment, the expected absorption of DTAs on losses carried forward, the expected distribution of Q1 2015 net income of insurance companies, and the effect of the Danish compromise (under which insurance investments are risk weighted instead of being deducted from capital, with a benefit of 13 basis points).
(4) Includes Q1 2015 net income after the deduction of accrued dividends; Phased-in Common Equity ratio at 13% not considering Q1 2015 net income after pro quota dividends.
 

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