MILAN, Aug 4 – Italy’s Intesa Sanpaolo, which has just sealed a deal to buy smaller rival UBI, on Tuesday beat expectations with a 16% yearly rise in second-quarter profit despite 1.4 billion euros in provisions against loan losses.
Net profit for the three months through June came in at 1.4 billion euros ($1.7 billion) against an average 1.1 billion euro forecast in a Reuters survey of six analysts.
Earnings were helped by a 1.1 billion euro capital gain Intesa booked in the quarter from the sale of its retailers’ payments business to Nexi, which it used to increase provisions against loan losses in an economy ravaged by the fallout of the coronavirus pandemic.
Intesa said its net interest income, a measure of how much money a bank makes from its traditional lending business, declined only fractionally in the quarter versus the previous year. Fees however dropped 11% in a quarter impacted by a prolonged lockdown.
Revenues totalled 4.1 billion euros, in line with analyst forecasts.
Intesa last week won a tortuous takeover battle for rival UBI, snapping up Italy’s healthiest second tier peer to create the euro zone’s seventh-largest bank and drive profits through cost cuts and a focus on wealth management and insurance.
Intesa says the deal, Europe’s biggest banking merger in a decade, will allow the group to play a bigger role in the region where industry regulators are pushing for consolidation.
($1 = 0.8494 euros) (Reporting by Valentina Za, ediitng by Silvia Aloisi)