Today Intesa Sanpaolo went up against the trend by 0.22% and then fell by 0.62% to € 2.65 for a capitalization of 51.88 billion when the Ftse Mib accelerated its decline (-1.12%). Equita Sim raised the target price by 9% on the share to 3.2 euros per share, confirming the buy rating after the CEO, Carlo Messina, presented the 2021 accounts and the new 2022-2024 business plan.
During the call, Equita underlines, “it was reiterated that the targets were defined in a very conservative way and based on prudent assumptions”. In particular, the target of intermediation margins does not incorporate any increase in the cost of money, even if during the conference call with the analysts, the CEO Messina explained that every increase of 50 points on the interest rate curve implies a benefit on margins. for over 1 billion euros for bank accounts.
Furthermore, the group wanted to preserve a capital buffer of 500 million euros on operating costs and expects an underlying cost of risk of around 30 basis points (low), which would rise to 40 points in the event of further disposals of non-performing loans. The plan does not take into account the benefit of the DTAs (tax credits) from the merger with Ubi Banca last year.
On the capital front, the objective of a Cet 1 ratio of 12% is considered the minimum level with which Intesa Sanpaolo intends to operate. Even if the Milanese bank intends to move to higher levels, “potentially leaving room for an increase in remuneration compared to what is envisaged in the industrial plan”, writes Equita. In fact, this is what the CEO Messina explained on Friday in a conference call with analysts. Any further distributions of capital will be defined each year from 2023.
The Milanese SIM raises the estimates for the two-year period 2022-23 (+ 1%), with an expected net profit in 2022 to 5.2 billion compared to the target of the same bank for over 5 billion euros, while raising those for 2024-25 + 3% on average to reflect greater cost efficiencies. At 2025 Equita expects a net profit of 6.7 billion compared to a guidance of 6.5 billion, which implies a profitability (Rote) of 13.4%.
Following the revision of estimates and an announced buyback of 3.4 billion, whose shares will be canceled, as Messina himself explained, analysts raise the target price by 9% to 3.2 euros per share. At that value, the security would deal with a price compared to the book value (P / TE) of 1.2 times (over double the average of Italian banks, which travel around 0.5 times), equal to a Rote of 12 %.
Despite the stock being at a premium compared to the sector and “the excellent performance since the beginning of the year + 13.7%, + 5% compared to the banking index”, Equita confirms the buy, considering “credible plan targets, based on prudent assumptions and which confirm a level of profitability well above the sector average “. To this the analysts underline the bank’s exposure “very favorable in the event of a rise in the interest rate curve and a particularly resilient business model also thanks to full control of the product factories”. And, last but not least, a “rich remuneration for shareholders, with room for further increases given the excellent capital endowment and asset quality”.
But what makes Intesa Sanpaolo
The Milanese bank will pay 1.5 billion dividends on 2021 profit in May and 50% of 2022 profit in November, which, according to the guidance, should be over 5 billion euros. This is a 6.3% dividend yield at current prices, but if we add to this figure the 3.4 billion euros of buybacks that will be carried out in 2022 and the shares then canceled, it is a total yield (dividends + buybacks) of over 12.65% for a stock with a capitalization of approximately 52 billion. (All rights reserved)
