February 4, 2020 / 1:25 PM / 14 days ago

UPDATE 1-Intesa forecasts higher 2020 net profit after solid Q4

(Adds details)

By Valentina Za

MILAN, Feb 4 (Reuters) - Intesa Sanpaolo on Tuesday opened the Italian banks’ earnings season on a strong note, predicting a rise in profit in 2020 after reporting a higher-than-expected fourth-quarter net profit on the back of robust revenues.

Intesa and other big Italian banks are reaping the benefits of a more stable political situation at home after a coalition of the mainstream Democratic Party and the anti-establishment 5-Star Movement in September replaced a eurosceptic coalition.

Intesa said its net profit would grow in 2020 even without taking into account an expected capital gain from a 1 billion euro deal struck in December to sell its retailers’ payment business to payments group Nexi.

Intesa’s well-developed management and insurance business achieved an 8% increase in net fees in the three months through December from a year earlier.

The bank’s net interest income held broadly steady in the quarter, despite the challenges facing the industry from negative official interest rates which make lending unprofitable.

“Fee income is the standout positive in the quarter,” Jefferies analysts said in a note.

Quarterly net profit totalled 872 million euros ($963 million), above a 760 million euro estimate in a Reuters poll of eight analysts. Revenues rose 1.6% year-on-year to 4.57 billion euros in the three months through December, ahead of a 4.38 billion euro forecast.

Shares in the bank extended gains on the results and were up 3.8% by 1243 GMT.

After years of aggressive balance-sheet clean-up, writedowns of problem loans at Intesa were little changed in the quarter from a year earlier.

The share of impaired debt over total lending stood at 7.6%, the same level of three months earlier and one of the best in Italy, following a recent deal with bad loan manager Prelios.

The bank’s core capital ratio, also one of the strongest in Italy, was 14.1% at the end of the year, little changed from three months earlier.

Intesa, Italy’s biggest bank by number of branches, said it would pay out to shareholder 80% of its annual profit or 19.2 euro cents per share versus 19.7 euro cents the previous year. ($1 = 0.9052 euros) (Reporting by Valentina Za; editing by James Mackenzie and Jane Merriman)

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