MILAN (AP) — Italian bank Intesa Sanpaolo, fresh off its successful hostile takeover of a smaller rival to create Italy’s largest bank, on Tuesday posted a 16% increase in second-quarter profits as it cut costs and increased loan loss provisions against possible future impact from the COVID-19 pandemic.
The bank reported 1.4 billion euros ($1.7 billion) in net income for the period, up from 1.2 billion euros a year ago. Reflecting the difficult economic conditions, net interest income was flat at 1.7 billion while net fees dropped 11% to 1.7 billion euros. The bank said revenues were sustained by the insurance business, while operating costs were down nearly 3% due to cuts in personnel and administrative expenses.
Net income for the first six months of the year was up 13% to 2.6 billion euros, representing the lion’s share of the 3 billion euros in net income forecast for the full year. That takes into account 880 million euros set aside for future COVID-19 impact.
Intesa Sanpaolo last week completed the takeover of UBI Banca, winning the support of 90.2% of the target bank’s shareholders after a five-month struggle. The move pushes ahead consolidation, which Italy’s central bank has advocated to improve efficiency in a sector long dominated by regional banks, and positions the new group for a larger role in Europe.
‘’Together we are stronger and … have greater potential for growth,’’ CEO Carlo Messina said in a statement.
He noted that the takeover makes the new bank the second biggest in the eurozone in terms of market capitalization, 6th for operating income and 8th for total assets. A business plan will be outlined next year ‘’as soon as the macroeconomic scenario becomes clearer,’’ Messina said.
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