Intesa Sanpaolo SpA Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Antonio Reale - Morgan Stanley - Analyst : Hi. Good afternoon. It's Antonio from Bank of America. I have two questions, please. One on cost and one on use of capital. If I remember right, I think you had something like EUR5 billion of IT investments over the plan horizon, of which I think, on the slide, you show you deployed EUR3.5 billion in the business. And this, I think, was with the view that these investments would yield a return also in the form of better efficiency gains. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, ISP.MI - Q3 2024 Intesa Sanpaolo SpA Earnings Call You've talked about the agreement with the unions, adding more headcount optimization. You're then taking further initiatives of internal rationalization within some of your legal entities. My question for you is how much more internal synergies you think you can achieve on a stand-alone basis. And how should we think about your cost base going forward? That's my first question. The second one is around use of capital. I think on slide 21 -- sorry, 29, you showed the post Basel IV in 2025, you're going to have a CET1 ratio of 14.5%, which would suggest quite a large chunk of eligible capital up for special distribution at the end of this year and next. On my back of the envelope between EUR2 billion and EUR3 billion of buybacks a year for this and next could be on the cards. Now my question is, with the shares at basically EUR4, is that still the best use of capital in your view?

Question: Antonio Reale - Morgan Stanley - Analyst : Thank you.

Question: Azzurra Guelfi - Citi - Analyst : Hi. Good afternoon. A couple of questions from me. One is on capital. Just following up from the previous one. it seems reading between the line that you feel almost comfortable that you can distribute more than 100% of profit. Is correct in terms of proposition? And if that's not the case, you will have a stand still. You have looked for more opportunity for cost. You look at opportunities on how to defend the NII growth in fees. But -- and you've never been shy of doing like opportunistic acquisition. Can you think about capital deployment in Wealth Management to replicate like a current successful model already and with the growth? And the second one, if I may, on the NII, you are indicating in the outlook resilient NII, this quarter NII has gone down roughly 2% quarter-on-quarter. And is that what you mean by resilient? Or is it like a bigger -- because consensus has, if you want an implied bigger drop versus what is done so far? Thank you.

Question: Andrea Filtri - Mediobanca - Analyst : Thank you. As a financial conglomerate, you have the option of expanding asset management, leaving the goodwill reduction at the Intesa SanPaolo Vita level something that a European peer has announced not too long ago and something that most other peers of yours cannot do. How do you look at this strategic optionality versus the alternatives of organic growth and share buybacks when you consider your capital management? Thank you.

Question: Andrea Filtri - Mediobanca - Analyst : Thank you.

Question: Delphine Lee - JPMorgan - Analyst : Yes. Good afternoon. Thank you for taking my question. My first one is to come back on fees and commissions and the potential that is coming from -- and the boost that you can get from the lower rates. I mean, you've commented in the past that you could generate high single-digit growth REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, ISP.MI - Q3 2024 Intesa Sanpaolo SpA Earnings Call when rates are below 3%. I mean you already had quite a strong performance already in 2024. Do you think that this is something that you can replicate in the next coming -- I mean, in the next year or so? Given the comment you've just talked about in terms of the initiatives? Or you think '24 would be somewhat of a high base? Then my second question is just to clarify your comments on the cost because -- I mean -- so you -- I mean, your guidance is clear for '25 that the cost would decline on the back of the staff reduction that you've just announced. I'm just thinking about more longer-term by '26 sort of what kind of cost evolution could we get beyond '25? Can that cost base continue to go down? Do you feel that you still need to continue to invest and that's maybe a bit unreasonable to assume a constant decline of the year.

Question: Giovanni Razzoli - Deutsche Bank - Analyst : Good afternoon. So I have two questions. Intesa Sanpaolo, it looks to me at least a large asset management group, which controls the bank and not other way around for the kind of assets that you are continuing to reach. I was wondering whether you feel that your scale is now fair in terms of possibility to gather the economies of scale that this kind of business is requiring. Given your -- the answer that you've made before, it seems to me that you don't have that much appetite for external growth in this business. So if you can please confirm this. And one of the main positive elements of the quarter, in my view, was the increase in the net inflows of asset management product in the third quarter despite the negative seasonality, EUR2.6 billion, if I'm not mistaken. Do you see this trend increasing also in the next couple of quarters, especially if rates were -- to continue to go do down.

Question: Ignacio Ulargui Lopez - BNP Paribas Exane - Analyst : Thanks very much for the presentation and for taking my questions. I have two, if I may. The first one is on lending. Just wanted to see how do you see loan growth evolving in the context of the relatively solid economic backdrop that you have in Italy? How do you think that, that could support NII into 2025? And the second one also linked to the capacity of your moving assets from -- moving to assets under custody and assets under management. How do you see deposit covering in a context of improved economic outlook. Do you think that we should expect kind of that part as feeding into the AUC and AUM? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, ISP.MI - Q3 2024 Intesa Sanpaolo SpA Earnings Call

Question: Ignacio Ulargui Lopez - BNP Paribas Exane - Analyst : Thank you.

Question: Pamela Zuluaga - Credit Suisse - Analyst : Hello. Good afternoon. Thank you very much for taking my question. The first one is around insurance income. I was wondering if you could give us some color around the quarterly declines in this line. What are the drivers behind this evolution? And how are you thinking about it moving forward, particularly since you're expecting more resilience on the diversified revenue lines protecting the NII declines. Then I also wanted to ask you on the trading gains that surprised this quarter and helped maintain broadly -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, ISP.MI - Q3 2024 Intesa Sanpaolo SpA Earnings Call

Question: Pamela Zuluaga - Credit Suisse - Analyst : Just wondering if you could give us some color around the quarterly declines in insurance income that we saw. What are the drivers behind this evolution? And then the second one is on the trading gains that surprised this quarter and helped overall maintain stable revenues. If I look at your guidance on the net income for 2025, you're targeting, among other things, precisely better trading. Can you please explain your expectations for this trading line? And are you targeting these gains could offset the NII decline?

Question: Hugo Cruz - KBW - Analyst : Thanks for the time. So two questions. One, on the cost of risk. I remember a few quarters ago, you're saying that you started off 30 basis points as a sort of a floor to be conservative. This year, you've been doing a little bit lower in the 20s. You haven't used any overlay. So should we think rates REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, ISP.MI - Q3 2024 Intesa Sanpaolo SpA Earnings Call going down will help as your asset quality. So should we think that floor is actually going down, perhaps, going to 20 basis points, and we could see cost of risk structurally lower going forward? So that's the first question. Second, on the NII, you raised the estimate for this year. But if I assume 15.6, which is above your target. That still implies a decline of almost 6% in

Question: Hugo Cruz - KBW - Analyst : Thank you very much.

Question: Andrea Lisi - Equita SIM - Analyst : Yeah. Thank you for taking my question. The first one is, again, coming back on what you said, previously, as regards to the last quarter that you will be used also to sustain the future profitability. Can we imagine further actions on top of the one you said -- you announced on cost and the possibility to further maybe reduce loan loss provision in order to sustain the performance for next year? Should (inaudible) we something else? And the second is just an update, if you can provide us an indication of the amount of performance fees and upfront fees that we saw in this quarter that was characterized by significant inflows. Thank you.

Question: Andrea Lisi - Equita SIM - Analyst : Okay. Thank you.

Question: Fabrizio Bernardi - Intermonte SIM - Analyst : Hi, everybody. Two very simple questions. First is on M&A in Italy. If you can give us your mood about this. I know you have a very wide corporate, let's say, coverage of Italy, but maybe you can let us understand how the mood is going or improving? And the second is, if we assume that you have some basis points of free capital, would you do buyback, like the one that you approved, let's say, the last year, the EUR1.7 billion or given your shareholder base, it's better to consider a cash dividend. Thank you.

Question: Fabrizio Bernardi - Intermonte SIM - Analyst : Thank you.