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Intesa Sanpaolo: consolidated results at december 31st 2013

Very strong balance sheet: intesa sanpaolo, “not addicted” to the ecb and one of the few banks in the world already basel 3 compliant in terms of capital ratios and liquidity, further improves its leading position.

Proposed cash dividends in line with previous year’s levels.

Robust earnings despite the challenging environment, reflecting strong increase in commissions and assets under management.

Particularly rigorous and conservative provisioning policy, even amid signs of stabilising credit trends, also leveraging the gain on the stake in the bank of italy.

Balance sheet further strengthened, ahead of upcoming asset quality review (aqr) and stress test exercise on european banks to be conducted during 2014.

Significant Excess capital allows ample strategic flexibility: ~€11bn capital buffer ahead of the aqr and ~€8bn excess capital.
Strong capital base, which continues to improve and is well above regulatory requirements. Pro-forma basel 3 common equity, net of dividends accrued in 2013:

  • 12.3% fully loaded cet1 ratio(1)
  • equivalent to approximately €8 billion of excess capital(2)
  • corresponding to approximately €11billion of capital buffer ahead of the aqr(3)

Proposed cash dividend(4) of €5 cents per ordinary share and savings share:

  • dividend yield(5) of 2.2% per ordinary share and 2.6% per savings share

Robust net income excluding impairment of goodwill and other intangible assets:

  • €1,218 million for full year
  • €578 million for the fourth quarter

strong growth in net commissions:

  • up 12.8% for the year
  • up 9.6% in the fourth quarter versus the previous three months

particularly rigorous and conservative provisioning policy:

  • npl coverage ratio further strengthened up to 46%, with a coverage of the doubtful loan component up to 62.5% (128% and 129%, respectively, including collateral)
  • robust reserve buffer on performing loans further reinforced

Impairment of goodwill and other intangible assets:

  • prudent impairment of €5.8 billion in q4 and in full-year 2013, mainly related to non-cash based operations
  • accounting effect only and no impact on cash-flow, liquidity, solidity, capital ratios and future profitability

HIGHLIGHTS:

Capital Ratios:

Pro-Forma Basel 3 Common Equity On A Fully Loaded Basis At 12.3%
Core Tier 1 At 11.9% Under Same Computation Of Insurance Investments, At 11.3% Considering New Computation
Tier 1 At 12.8% Under Same Computation Of Insurance Investments, At 12.2% Considering New Computation

Operating Income: Fy 2013:
Q4 2013:
-8.9% At €16,295m Vs €17,881m In 2012;
-4.9% At €3,944m Vs €4,146m In Q3 2013
Operating Costs: Fy 2013:
Q4 2013:
-6.3% At €8,352m Vs €8,913m In 2012;
+7.9% At €2,202m Vs €2,041m In Q3 2013
Operating Margin: Fy 2013:
Q4 2013:
-11.4% At €7,943m Vs €8,968m In 2012;
-17.2% At €1,742m Vs €2,105m In Q3 2013
Income Before Tax From Continuing Operations: Fy 2013:
Q4 2013:
-31.1% At €2,489m(6) Vs €3,610m In 2012;
+16.5% At €664m(6) Vs €570m In Q3 2013
Net Income: Fy 2013:
Q4 2013:
-€4,550m Vs €1,605m In 2012;
-€5,190m Vs €218m In Q3 2013
Net Income Excluding Impairment Of Goodwill/Intangibles: Fy 2013:
Q4 2013:
€1,218m Vs €1,605m In 2012;
€578m Vs €218m In Q3 2013

 

 

(1) Estimated by: applying the parameters set out under fully phased-in Basel 3 to the financial statements as at December 31st 2013; considering the total absorption of deferred tax assets (DTAs) related to goodwill realignment and the expected absorption by 2019 of DTAs on losses carried forward, the benefit deriving from the stake in the Bank of Italy (86bps), the effect of the Danish compromise (under which insurance investments are risk weighted instead of being deducted from capital, with a benefit of 13bps); and including the expected benefits from the optimisation actions on capital sources and requirements and from the absorption of sovereign risk shock (equal overall to one basis point).

(2) Compared to Basel 3 compliance level for Global SIFIs of 9.5% (4.5% Common Equity + 2.5% conservation buffer + 2.5% current maximum Global SIFI buffer).

(3) Compared to the capital adequacy threshold of 8% being applied in the AQR. The capital buffer does not include the benefit deriving from the stake in the Bank of Italy.

(4) To be distributed from the Extraordinary Reserve.

(5) At the Intesa Sanpaolo stock price on March 26th 2014.

(6) This figure includes extraordinary profits of 2,558 million euro deriving from the recognition of the new shares held in the capital of the Bank of Italy, which were issued by the Central Bank following the amendments to its Statute approved by the extraordinary shareholders’ assembly of December 23rd 2013. On the basis of the relevance of both the legislative measures and the amendments to the Statute, the Intesa Sanpaolo Group deems that the new shares, into which the new capital of the Bank is divided, represent new financial instruments that are unlike those held before the reform insofar as they carry substantially different legal and economic rights. This being a unique circumstance, it has been deemed proper that the decision be supported by qualified professional opinion for the purpose of precisely defining the legal and accounting issues of the transaction. Competent authorities are still carrying out in-depth assessments concerning the application of IAS/IFRS to the transaction. The outcome may entail another categorisation of the transaction leading to the recognition of the benefit through shareholders’ equity, instead of through profit and loss, leaving total profitability unchanged. This benefit has had no impact on the Core Tier 1 ratio, having been sterilised through prudential filters. The Intesa Sanpaolo Group acknowledges that in-depth assessments are under way. However, on the grounds of opinion received, the Group has reached the aforementioned conclusions that the new shares in the capital of the Bank of Italy are financial instruments substantially different from the previous ones and therefore must be recognised at fair value through profit and loss.

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