Italy’s Intesa lifts 2021 profit outlook after strong quarter

MILAN (Reuters) – Italy’s biggest bank Intesa Sanpaolo on Wednesday strengthened its full-year profit outlook after third-quarter earnings beat market expectations helped by lower than forecast loan losses.

Intesa’s earnings confirmed the encouraging picture for the sector painted by rivals such as France’s BNP Paribas, Spain’s or Britain’s Lloyds – whose results were also boosted by either shrinking provisions or the release of cash set aside against COVID-driven loan losses.

Net profit at Intesa came in at 983 million euros ($1.1 billion) in the July-September period, well above an analyst consensus of 850 million euros compiled by Reuters.

It now expects a 2021 profit of above 4 billion euros. The figure was Intesa’s previous full-year target which it reached in the first nine months.

Revenues totalled 5.09 billion euros, above the expected 4.93 billion euros, thanks mostly to a strong trading performance.

Income from the lending business was little changed quarter-on-quarter, while falling 6.1% from a year ago due to negative interest rates, compounded by intense competition and slowing credit growth in Italy.

Net fees, on the other hand, rose 8.3% year-on-year thanks to robust commercial banking and asset management activity in the post-lockdown months, while easing 1.9% from the second quarter.

Provisions against loan losses fell a larger-than-expected 44% from July-September 2020, when the bank put aside nearly 1 billion euros to prepare for future damage on its loan book from COVID-19.

Shares were little changed after the results and were down 0.3% by 1255 GMT, compared with a flat Italy banking index.

($1 = 0.8632 euros)

(Reporting by Valentina Za; editing by Agnieszka Flak)

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