INTESA SANPAOLO: CONSOLIDATED RESULTS AS AT 31 DECEMBER 2023

CONSOLIDATED RESULTS AS AT 31 DECEMBER 2023

06.02.2024

THE RESULTS FOR 2023 CONFIRM THAT INTESA SANPAOLO IS ABLE TO GENERATE SUSTAINABLE PROFITABILITY EVEN IN COMPLEX ENVIRONMENTS THANKS TO ITS WELL-DIVERSIFIED AND RESILIENT BUSINESS MODEL, WITH NET INCOME OF €7.7 BILLION DRIVEN BY NET INTEREST INCOME.

SIGNIFICANT CASH RETURN TO SHAREHOLDERS: PROPOSAL FOR TOTAL DIVIDENDS OF €5.4 BILLION (€2.6 BILLION INTERIM DIVIDENDS FOR 2023 PAID IN NOVEMBER 2023 AND €2.8 BILLION PROPOSED REMAINING DIVIDENDS FOR 2023 TO BE PAID IN MAY 2024) TO BE SUBMITTED TO THE SHAREHOLDERS' MEETING AND INTENTION TO EXECUTE A BUYBACK EQUAL TO AROUND 55 BASIS POINTS OF COMMON EQUITY TIER 1 RATIO AS AT 31 DECEMBER 2023, TO BE LAUNCHED IN JUNE 2024, SUBJECT TO APPROVALS FROM THE ECB AND THE SHAREHOLDERS' MEETING.

THE SOLID PERFORMANCE OF INCOME STATEMENT AND BALANCE SHEET IN 2023 TRANSLATED INTO SIGNIFICANT VALUE CREATION FOR ALL THE STAKEHOLDERS, NOT ONLY FOR THE SHAREHOLDERS, WHICH IS ALSO GROUNDED IN THE GROUP'S STRONG ESG COMMITMENT.PECIFICALLY, €4.6 BILLION TAXES WERE GENERATED (UP BY AROUND €1.4 BILLION ON 2022 DUE TO GROWTH IN NET INTEREST INCOME), THE FOOD AND SHELTER PROGRAMME FOR PEOPLE IN NEED WAS EXPANDED (OVER 36.8 MILLION INTERVENTIONS IN THE PERIOD 2022-2023), INITIATIVES WERE ENHANCED TO FIGHT INEQUALITIES AND FOSTER FINANCIAL, SOCIAL, EDUCATIONAL AND CULTURAL INCLUSION (AROUND €14.8 BILLION OF SOCIAL LENDING AND URBAN REGENERATION IN THE PERIOD 2022-2023), AROUND €1.5 BILLION TO BE CONTRIBUTED IN 2023-2027 TO ADDRESS SOCIAL NEEDS (AROUND €300 MILLION OF WHICH ALREADY CONTRIBUTED IN 2023), INTESA SANPAOLO ACTED AS A STRONG PROMOTER IN THE 2023 RENEWAL OF THE NATIONAL COLLECTIVE LABOUR CONTRACT FOR THE BANKING AND FINANCIAL SECTOR.

INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN 2023, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €40 BILLION. IN 2023, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF AROUND 3,600 COMPANIES, THUS SAFEGUARDING 18,000 JOBS. THIS BROUGHT THE TOTAL TO 140,800 COMPANIES SINCE 2014, WITH 704,000 JOBS SAFEGUARDED OVER THE SAME PERIOD.

INTESA SANPAOLO IS FULLY EQUIPPED TO CONTINUE SUCCEEDING IN THE FUTURE GIVEN THE GROUP'S KEY STRENGTHS - NOTABLY RESILIENT PROFITABILITY, A SOLID CAPITAL POSITION, THE ZERO-NPL BANK STATUS AND HIGH FLEXIBILITY IN MANAGING OPERATING COSTS - AND ITS LEADERSHIP IN WEALTH MANAGEMENT, PROTECTION & ADVISORY WITH AROUND €100 BILLION IN CUSTOMER FINANCIAL ASSETS IDENTIFIED TO FUEL ASSETS UNDER MANAGEMENT GROWTH FACILITATED BY DECLINING INTEREST RATES.

TECHNOLOGY REPRESENTS A FURTHER KEY FACTOR TO SUCCEED, WITH THE NEW CLOUD-NATIVE TECH PLATFORM, THE DIGITAL CHANNELS OF ISYBANK AND FIDEURAM DIRECT AND ARTIFICIAL INTELLIGENCE SOLUTIONS THAT ARE EXPECTED TO GENERATE ADDITIONAL CONTRIBUTION TO 2025 GROSS INCOME OF AROUND €500 MILLION, NOT ENVISAGED IN THE 2022-2025 BUSINESS PLAN.

THE IMPLEMENTATION OF THE 2022-2025 BUSINESS PLAN IS PROCEEDING AT FULL SPEED AND THE KEY INDUSTRIAL INITIATIVES ARE WELL UNDERWAY, WITH THE PROSPECT OF NET INCOME IN 2024 AND 2025 TO EXCEED €8 BILLION.

THE CAPITAL POSITION AS AT 31 DECEMBER 2023 WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS: THE COMMON EQUITY TIER 1 RATIO WAS 13.7% AFTER DEDUCTING FROM CAPITAL €2.6 BILLION INTERIM DIVIDENDS FOR 2023 PAID IN NOVEMBER 2023 AND €2.8 BILLION PROPOSED REMAINING DIVIDENDS FOR 2023 (13.2% TAKING INTO ACCOUNT THE IMPACT OF AROUND 55 BASIS POINTS FROM THE BUYBACK INTENDED TO BE LAUNCHED IN JUNE 2024), NOT CONSIDERING A BENEFIT OF AROUND 125 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 25 BASIS POINTS WITHIN THE 2024-2025 HORIZON.

GROSS INCOME WAS UP 64.6% AND OPERATING MARGIN WAS UP 31.4% ON 2022, WITH OPERATING INCOME UP 17.2% AND OPERATING COSTS UP 3.6%.
CREDIT QUALITY:
- NPLS WERE DOWN 9.7% NET AND 7% GROSS ON YEAR-END 2022;
- NPL RATIO WAS 1.2% NET AND 2.3% GROSS, RESPECTIVELY 0.9% AND 1.8% ACCORDING TO THE EBA METHODOLOGY;
- COST OF RISK IN 2023 STOOD AT 36 BASIS POINTS, 32 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS TO FAVOUR DE-RISKING;
- EXPOSURE TO RUSSIA HAS BEEN FURTHER REDUCED: DOWN BY 82% SINCE JUNE 2022 TO 0.1% OF THE GROUP'S TOTAL CUSTOMER LOANS.

• NET INCOME OF €7,724M IN 2023, UP 76.4% COMPARED WITH €4,379M IN 2022
• GROSS INCOME UP 64.6% ON 2022
• OPERATING MARGIN UP 31.4% ON 2022
• OPERATING INCOME UP 17.2% ON 2022
• OPERATING COSTS UP 3.6% ON 2022

• CREDIT QUALITY:
• NPL STOCK DOWN 9.7% NET AND 7% GROSS ON YEAR-END 2022
• NPL RATIO OF 1.2% NET AND 2.3% GROSS, RESPECTIVELY 0.9% AND 1.8% ACCORDING TO THE EBA METHODOLOGY
• COST OF RISK IN 2023 AT 36 BASIS POINTS, 32 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS MADE IN Q4 TO FAVOUR DE-RISKING (FROM 70 BASIS POINTS IN 2022, 30 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE EXPOSURE TO RUSSIA AND UKRAINE, FOR OVERLAYS AND TO FAVOUR DE-RISKING, NET OF THE PARTIAL RELEASE OF GENERIC PROVISIONS WHICH WERE SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS)
• A SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS:
• COMMON EQUITY TIER 1 RATIO AS AT 31 DECEMBER 2023, AFTER DEDUCTING FROM CAPITAL (°) €2.6BN INTERIM DIVIDENDS FOR 2023 PAID IN NOVEMBER 2023 AND €2.8BN PROPOSED REMAINING DIVIDENDS FOR 2023, AT 13.7% (°°) (13.2% TAKING INTO ACCOUNT THE IMPACT OF AROUND 55 BASIS POINTS FROM THE BUYBACK INTENDED TO BE LAUNCHED IN JUNE 2024 (°°°)) NOT CONSIDERING THE BENEFIT OF AROUND 125 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs) OF WHICH AROUND 25 WITHIN THE 2024-2025 HORIZON
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(°) Deducting from capital also the coupons accrued on the Additional Tier 1 issues.
(°°) Estimated pro-forma Common Equity Tier 1 ratio of 15.1%, taking into account the total absorption of deferred tax assets (DTAs) related to goodwill realignment, loan adjustments, the first time adoption of IFRS 9 and the non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the Aggregate Set of Banca Popolare di Vicenza and Veneto Banca, as well as the expected absorption of DTAs on losses carried forward and DTAs related to the acquisition of UBI Banca and the agreement with the trade unions of November 2021, and the expected distribution on the 2023 net income of insurance companies; 14.5% taking into account the impact of around 55bps from the buyback intended to be launched in June 2024 (°°°).
(°°°) Subject to approvals from the ECB and the Shareholders' Meeting.

Turin - Milan, 6 February 2024 - At its meeting today, the Board of Directors of Intesa Sanpaolo approved both parent company and consolidated results for the year ended 31 December 2023 (#).
The results for 2023 confirm that the Intesa Sanpaolo Group is able to generate sustainable profitability even in complex environments thanks to its well-diversified and resilient business model, with net income of €7.7bn driven by net interest income.

The solid performance of income statement and balance sheet in 2023 translated into significant value creation for all stakeholders, which is also grounded in the Group's strong ESG commitment. Specifically:
- significant cash return to shareholders: proposal for total dividends of €5.4bn (€2.6bn interim dividends for 2023 paid in November 2023 and €2.8bn proposed remaining dividends for 2023 to be paid in May 2024) to be submitted to the Shareholders' Meeting and intention to execute a buyback equal to around 55bps of Common Equity Tier 1 ratio as at 31 December 2023, to be launched in June 2024, subject to approvals from the ECB and the Shareholders' Meeting;
- €4.6bn taxes (°) generated and increased by around €1.4bn on 2022 (°°) as a consequence of the growth in net interest income which drove the increase of around €4.7bn in gross income;
- the expansion of the food and shelter programme for people in need (over 36.8 million interventions in the period 2022-2023);
- the enhancement of initiatives to fight inequalities and foster financial, social, educational and cultural inclusion (around €14.8bn of social lending and urban regeneration in the period 2022-2023);
- an amount equal to around €1.5bn total costs to be contributed in the five-year period 2023-2027 to support initiatives addressing social needs (around €300m already included in the 2023 results and the remaining portion included, on a pro-rata basis, in the outlook for 2024-2025 net income), with around 1,000 people devoted to supporting these initiatives;
- Intesa Sanpaolo acted as a strong promoter in the 2023 renewal of the national collective labour contract for the banking and financial sector, which adds to the one-off contribution of around €80m that the Bank allocated in 2022 to its people, except the managers, to mitigate the impact of inflation.
Intesa Sanpaolo is fully equipped to continue operating successfully in the future given the Group's key strengths, notably resilient profitability, a solid capital position, the zero-NPL bank status, high flexibility in managing operating costs, and its leadership in Wealth Management, Protection & Advisory with around €100bn in customer financial assets identified (^) to fuel assets under management growth facilitated by declining interest rates. The exposure to Russia (^^) was further reduced: down by 82% (around €3bn) on end of June 2022 to 0.1% of the Group's total customer loans. Cross-border loans to Russia were largely performing and classified in Stage 2.
(#) Methodological note on the scope of consolidation on page 26.
(°) Direct and indirect taxes.
(°°) Entirely in direct taxes.
(^) Out of direct deposits and assets held under administration.
(^^) On-balance credit exposure to customers, both cross-border and at the Russian subsidiary Banca Intesa, net of guarantees by Export Credit Agencies and after adjustments. As at 31 December 2023, after adjustments, the on-balance cross-border credit exposure to Russia amounted to €0.54bn of which €0.53bn to customers, net of €0.7bn guarantees by Export Credit Agencies (no off-balance to customers and off-balance of €0.07bn to banks, net of €0.3bn guarantees by ECA) and the on-balance credit exposure of the subsidiaries amounted to €0.8bn, of which €0.12bn to customers, for Banca Intesa in Russia and €0.06bn, to banks, for Pravex Bank in Ukraine (off-balance, to customers, of €0.04bn for the Russian subsidiary and €0.03bn for the Ukrainian subsidiary). The credit exposure to Russian counterparties currently included in the SDN lists of names to which sanctions apply amounted to €0.2bn.

Read the full consolidated financial results in the link: ISP Financial Results