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MILAN (Reuters) -Italy’s largest bank Intesa Sanpaolo (OTC:ISNPY) on Friday laid out a set of ambitious goals, pledging to add 2.3 billion euros ($2.6 billion) in profits by 2025 and return 22 billion euros to investors while supporting green investment.
Intesa aims to drive its net profit to 6.5 billion euros in 2025 from 4.2 billion euros in 2021, betting on a boost from net fees which it wants to account for 57% of revenues in 2025 versus 54% last year.
To achieve that, Intesa plans to add around 100 billion euros in assets under management in the period with net fees growing on average by 4% a year to 11 billion euros in 2025.
Shares in the bank rose 1% in early trade as Chief Executive Carlo Messina set out its plans for the coming years before slipping back into negative territory.
With 13.5 million customers, or more than a fifth of Italy’s population, Intesa is the country’s largest retail bank as well as the biggest asset manager and life insurer.
A business model geared towards fees earned through wealth management and insurance has helped it to weather a period of negative interest rates better than most domestic rivals.
Intesa, whose second-biggest shareholder is decarbonisation backer BlackRock (NYSE:BLK), said it would cut net emissions to zero by 2050 on its entire loan book as well as the investment portfolio of its asset management and insurance.
It targets 88 billion euros in new green loans by 2025, including help for Italy’s small businesses to transition to cleaner energy.
DIGITAL BANK
In a push to further lower costs to 46.4% of income in 2025, Intesa will invest 4.8 billion euros in IT and set up a digital bank named isybank to serve 4 million retail customers with basic financial needs who cost it more than they bring in.
After reaching an accord in December with unions to cut a net 900 jobs by 2025, Intesa said it would close 1,050 branches over the plan’s period.
Now that regulators have lifted a pandemic-driven freeze on dividends, Intesa said it would pay out 6.6 billion euros this year, including a 3.4 billion euro share buyback.
The capital distribution plan compares with more than 16 billion euros planned by rival UniCredit in 2021-2024 under its strategy unveiled in December.
Intesa confirmed a 70% payout ratio in the years ahead and said it would assess on a yearly basis the possibility of additional capital distribution.
In keeping with CEO Messina’s stated ambition of becoming a “Nordic bank” in terms of problem loans, Intesa said they would account for only 1.6% of total lending by 2025, or 0.8% net of writedowns.
Scandinavian lenders have traditionally been immune from the soured loan problem with plagues southern lenders during economic slumps given their exposure to small businesses.
($1 = 0.8729 euros)
