Earnings call transcript: Intesa Sanpaolo Q2 2025 earnings soar, stock jumps

Intesa Sanpaolo reported a record-breaking Q2 2025 net income of €2.6 billion, significantly boosting its full-year guidance. Earnings per share grew by 12% year-on-year, and the company upgraded its 2025 net income forecast to well above €9 billion. Following the announcement, Intesa Sanpaolo’s stock surged by 4.29%, reflecting strong investor confidence in its financial performance and strategic direction. According to InvestingPro data, the stock has delivered an impressive 208% total return year-to-date, showcasing exceptional momentum. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with a robust Financial Health Score.

Key Takeaways

• Record first half net income of €5.2 billion.
• Earnings per share increased by 12% year-on-year.
• Stock price rose by 4.29% following earnings announcement.
• Upgraded 2025 net income guidance to well above €9 billion.
• Focus on digital transformation and wealth management.

Company Performance

Intesa Sanpaolo achieved remarkable financial results in Q2 2025, with a net income of €2.6 billion, marking its best-ever quarterly performance. The bank’s return on equity reached 20%, with a 24% return on tangible equity. These results underscore the bank’s strong market position and effective strategy in wealth management and advisory services. Intesa Sanpaolo continues to lead in commission and insurance income in Europe, trailing only UBS.

Financial Highlights

• Revenue: Not specified.
• Earnings per share: Increased by 12% year-on-year.
• Net income: €2.6 billion for Q2 2025.
• Cost-income ratio: Lowest ever at 38%.
• Personnel costs: Decreased by 1%.
• Administrative costs: Down by 0.7%.

Earnings vs. Forecast

The company did not provide specific EPS and revenue forecasts in the earnings call transcript. However, the significant increase in net income and EPS growth indicates a strong performance likely exceeding market expectations.

Market Reaction

Intesa Sanpaolo’s stock experienced a robust increase of 4.29% post-earnings announcement, closing at €5.199. This surge suggests positive investor sentiment driven by the bank’s impressive financial results and upgraded guidance. The stock’s performance aligns with its position near the 52-week high of €5.468, indicating strong market confidence. InvestingPro data reveals a strong 32% price return over the past six months. For deeper insights into Intesa Sanpaolo’s valuation and growth prospects, subscribers can access the comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 stocks.

Outlook & Guidance

Looking ahead, Intesa Sanpaolo has upgraded its 2025 net income guidance to well above €9 billion, reflecting confidence in its strategic initiatives. The bank plans to distribute at least €8.2 billion in shareholder returns in 2024. It anticipates mid-single-digit growth in fees and commissions, with potential loan growth of 2-5% in the second half of the year. InvestingPro identifies the company as a significant dividend payer with a favorable P/E ratio relative to near-term earnings growth. Subscribers can access 8 additional exclusive ProTips and detailed financial metrics to make more informed investment decisions.

Executive Commentary

CEO Carlo Messina highlighted the bank’s sustainable business model, stating, "We are a sustainable 20% ROE bank with €1,400 billion in customer financial assets." He emphasized the long-term vision, saying, "We want results to stay for the next twenty years."

Risks and Challenges

• Potential tariffs on Italian corporates could impact profitability.
• Economic uncertainties in Europe may pose challenges.
• The planned headcount reduction of 9,000 by 2027 requires careful management.

Q&A

During the Q&A session, analysts inquired about the bank’s resilient net interest income strategy and its approach to mergers and acquisitions, which it currently avoids. The impact of potential tariffs on Italian corporates was also discussed, along with capital management and distribution strategies.

Intesa Sanpaolo’s Q2 2025 performance highlights its robust financial health and strategic focus on digital transformation and wealth management, positioning it well for future growth.

Full transcript - Intesa Sanpaolo SpA (ISP) Q2 2025:

Sarah, Conference Call Coordinator: Afternoon, ladies and gentlemen, and welcome to the conference call of Entesa Sanpaolo for the presentation of the First Half twenty twenty five Results posted today by Mr. Carlo Messina, Chief Executive Officer. My name is Sarah, and I will be your coordinator for today’s conference. At the end of the presentation, there will be a Q and A session. To enter the queue for questions, please press 11 at any time.

You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Questions. I remind you that today’s conference is being recorded. At this time, I would like to hand the call over to Mr.

Carlo Messina, CEO. Sir, you may begin.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Welcome to our first half twenty twenty five results conference call. This is Carlo Messina, Chief Executive Officer and I’m here with Luca Boca, our CFO and Marco Delfrat and Andrea Tamagnini, Investor Relations Officers. We are navigating the current geopolitical uncertainty from a position of strength, thanks to our resilient and well balanced business model. In fact, we just delivered our best ever six month net income at EUR 5,200,000,000.0, That means a return on equity of 20%, so return on equity of 20%, 24% on tangible. Earnings per share grew 12% on a yearly basis.

Net income in the second quarter was also the best ever at EUR 2,600,000,000.0. These top notch results are marked by record high commissions and insurance income. And net interest income grew strongly in the second quarter even as rates declined, and we continue to manage revenues in an integrated manner. I want to stress that Italian economy continues to show strong resilience. Italian SMEs are much stronger, and public and EU driven investments are supporting growth that we are ready to finance.

Looking ahead, we are upgrading our 2025 net income guidance to well above EUR 9,000,000,000, including Q4 managerial actions to strengthen future profitability. Intesa Sanpaolo offers one of the highest shareholder return in Europe. This year, we will distribute no less than EUR 8,200,000,000.0, considering the over EUR 3,000,000,000 final dividend paid in May. The EUR 2,000,000,000 buyback launched in June and the EUR 3,200,000,000.0 interim dividend to be paid in November. An additional capital distribution will be quantified at the end of the year, in line with our practice.

Costs are down. Asset quality remains top notch. We confirmed our best in class capital generation capabilities, and customer financial assets grew 37,000,000,000 on a yearly basis, of which EUR 12,000,000,000 in Q2. We are delivering strong internal synergies, avoiding risks related to acquisitions. I’m proud of these results and thank our people for their excellent contribution.

Let me underline that our strong profitability allow us to continue holding a world class position in social impact to fight poverty and reduce inequalities. Now let’s turn to Slide one for the key achievements of the first six months. Slide one. In the first half, we delivered record high net income and revenues, lowest ever cost income ratio, NPL ratios at historical lows, strong growth in common equity ratio and high increasing and sustainable value creation. Slide two.

In this slide, you can see the strong and continuous increase in net income that has more than doubled in five years. Slide three. In the past, we delivered a significant and sustainable increase in return on equity, earnings per share, dividends per share and tangible book value per share. Slide four. Thanks to our excellent six months performance, women are in a profitable position to upgrade the 2025 net income to well above EUR 9,000,000,000, including Q4 managerial action to strengthen future profitability.

Moreover, we clearly have significant excess capital, giving us a lot of flexibility for future additional distributions. Slide five. Our performance allow us to benefit all our stakeholders and strongly support the fight against poverty and inequalities. In the first half, families and businesses received EUR42 billion in new mediumlong term lending, up 44 in Italy on a yearly basis. Let’s now move to Slide seven for more details on our first half results.

Slide seven. In a nutshell, net income was up 9% in the first six months, and we accrued 3,700,000,000.0 in cash dividends. Slide eight. This slide shows the building blocks of the first half P and L with improved results across nearly all items. Please turn to the next slide for a look at our second quarter results, Slide nine.

Very briefly, in the second quarter, net interest income grew 5% quarterly. Revenues reached a record high with non motor P and C revenues up 15% on a yearly basis. Net income was the best Q2 result ever, up 6% versus the same quarter last year. Slide 10. In the first half, revenues were up despite the strong decline in market interest rates, thanks to our well diversified and resilient business model.

Slide 11. Net interest income was very resilient in the first half, and we raised our guidance for this year to a level well above 2023, with further growth expected next year, also thanks to the contribution from core deposits hedging. Slide number 12. In this slide, you can also see the quarter on quarter increase in net interest income despite the further reduction in Euribor. The growth drivers are the spread component that includes the contribution from core deposit hedging, the financial component mainly driven by the higher contribution from the securities portfolio and the volume component that also benefited from the growth in loan volume in the quarter.

Slide 13. Customer financial assets were up strongly on a yearly and quarterly basis. In the quarter, we had more than EUR 6,000,000,000 growth in assets under management despite the market volatility due to tariffs, and we can count on our unmatched client advisory network to drive future growth. Over EUR 900,000,000,000 in credit deposit and assets under administration are already fueling our wealth management, protection and advisory businesses. Let’s now move to Slide 14.

In the first six months, commissions were up 5% yearly, with a 9% growth in wealth management portion. Our fully owned product factories are a clear competitive advantage, and our top notch advisory services are stabilizers for the end of market volatility on fees, with over 30% growth in related additional commissions. Please turn to the next slide for a closer look at insurance income. Slide 15. Non motor P and C contribution was the main driver for insurance income growth, and we still have significant upside potential with both individuals and corporate clients.

Slide 16. The contribution from commissions and insurance income to revenues is by far the highest in Europe after UBS. Please turn to Slide 17. The costincome ratio was the best ever at 38%. So please turn to Slide 18 for a closer look at the breakdown of costs.

Operating costs were down despite the impact of the national labor contract renewal and depreciation linked to tech investments. Personnel costs decreased 1% and administrative costs 0.7%. We achieved an almost 3,400 headcount activation in the first half of the year. Slide 19. We have high flexibility to further reduce costs, thanks to our tech transformation.

By 2027, we will have 9,000 exits with savings of EUR 500,000,000. 9,000 exits are equal to the ones deriving from the UBI merger. Slide 20, we have the best in class costincome ratio in Europe. And now let’s move to Slide 21 for a look at our asset quality. Slide 21.

Asset quality remained excellent. Inflows are at historical lows, and NPL stocks further declined in the quarter. Slide 22. Our NPL stock and ratios are clearly among the best in Europe. Slide 23.

As you can see, we are also very well positioned in terms of Stage two. Slide 24. Our annualized cost of risk is just 24 basis points with no overlays released NPL coverage ratio at 50%. We see no signs of asset quality deterioration. Slide 25.

After quarter by quarter, we keep reducing our Russia exposure, down to less than 0.1% of the group’s total loans, with local loans close to zero. Slide 26 for an update on capital. 26. In the first half, the common equity ratio increased by 65 basis points to 13.5% and will increase further in the coming quarters. In the next three slides, you have the usual update on our sound liquidity position and ESG actions with additional slides on our leading ESG position in the appendix.

But let’s move to Slide 31 to see how ISP is fully equipped to succeed in any scenario. Slide 31. Our profitability and capital position remains strong even in adverse conditions. We have a very resilient and efficient business model, and we have already deployed EUR 4,600,000,000.0 in tech investments, including artificial intelligence, key enablers for future and further efficiency gains. Our net NPL stock is just EUR 4,900,000,000.0, and we can count on EUR 900,000,000 in overlays.

Last but not least, the management team has a strong track record in delivering results. Slide 32. Intesa Sanpaolo stands out in Europe across key metrics and is better positioned than peers to face any future challenge. Slide thirty two thirty three.

: In this slide that we share every quarter, you can appreciate our unique positioning, thanks to our commissions driven and efficient business model, supported by strong tech investments. Let’s move to Slide 34 for a few words on the strength

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: of the Italian economy. The Italian economy remains resilient, supported export oriented and highly diversified companies, a strong banking system, high household wealth and low private debt, employment and activity rates at the highest levels and continued EU public investments. So we expect Italian GDP to grow this year and next year. Slide 35. Italian companies are in a stronger position and more resilient to external shocks today compared to the past, even considering tariffs.

Their debt to equity ratio has decreased over time, and their liquidity buffers are at all time highs. Please turn to Slide 37. This slide offers a recap of our best ever six months and the reasons why we are fully equipped to succeed in the future. To finish, please turn to Slide 38 for the outlook. Slide 38.

Thanks to our excellent six months performance, we are in a comfortable position to upgrade the full year net income guidance to well above EUR 9,000,000,000, including Q4 managerial actions to strengthen future profitability. This is a level we consider fully sustainable in the years ahead. As always, we will continue to manage revenues in an integrated manner, maintaining a strong focus on cost efficiency, asset quality and the sustainability of results. We are delivering one of the highest capital returns and dividend yields in European banking while maintaining rock solid capital and continuing to lead on social impact. We clearly have strong internal capital generation and excess capital.

An additional distribution will be determined at year end. So thank you for your attention. And now we are happy to take your question. So thank you.

: Thank you.

Sarah, Conference Call Coordinator: Thank you. We will now start with our first question. This is from Delphine Lee from JPMorgan. Please go ahead.

Delphine Lee, Analyst, JPMorgan: Yes. Good afternoon. Thank you for taking my questions. My first one is on net interest income, please. Just wanted to understand a little bit what’s driving the I mean, clearly, you had a very good quarter with more resilient trends, just wanted to have a bit more color on the improvement in the guidance that you’ve given of well above 23 level.

And then secondly, on fees and commission, so is your target for this year to still grow mid single digits? If you just wouldn’t mind commenting on the underlying moving parts of that as well. Thank you very much.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you, Delfin. Looking starting from net interest income, that is the most important part of the upgrading of our outlook, but not only for 2025, especially for 2026. So we are now working on the new business plan, and the preparation of the plan is part of the story that we are starting to create from this quarter in terms of final result for 2025 in order to prepare the new business plan. So in net interest income is the area in which we are continuing to have a very good performance in terms of core hedging facilities. So the contribution of core hedging is very positive and new to be very positive.

And our expectation is that we remain positive also during 2026. At the same time, we worked in order to optimize the medium term cost of funding because we had some wholesale sales, I guess, during the first quarter, and we didn’t replace and our expectation is not to replace this medium term funding. This has created a condition to have a positive impact on net interest income, and this will remain also for the next years. Our expectation is also that looking at the commercial activities, we have seen tariff recoveries in terms of loan growth. So there is a clear reduction the competitive pressures coming from this crazy M and A attitude that we had in Italy in the last months.

We started again to have growth, especially in terms of new medium term lending. Then we have some portion of portfolio expiring, but we replaced so we are starting to have a momentum of growth in terms of loan book portfolio, especially related with the area that are more involved into the next generation EU funds. So it’s something that is based on companies in very good very good very positive and good shape, so with a limited impact coming from potential future nonperforming loans. This trend, in our expectation, will continue also in the next quarters. And this can prepare for a further growth in 2026 of the level of net interest income.

At the same time, as announced in the first quarter, in which we increased the size of the security portfolio, we are now having in this quarter the first impact of the improved conditions of the security portfolio. You remember that in the last years, we reduced in a significant way the portfolio. So we replaced a portion of the portfolio in this first semester. And so we are also maintaining a good contribution in terms of net income coming from the security portfolio. Our expectation is that if interest rate will remain in the range of average 2%.

You’re right. But and then with a slight reduction during 2026, we can continue to have a very good performance. And net interest income can continue to be a good contributor to our results. So just a focus on a managerial way of managing the wealth management of the company. Today, deposits are continue to give a 2% a very good contribution in terms of markdowns, so with the reduction, but we get very good contribution.

So we are also looking at the right attention to the conversion of the portion of deposits into wealth management products. We have a selective portion of these deposits, especially term deposit that can be converted. But for the time being, we are also working in term of maximization of the relation between net interest income and fee and commissions. So moving into fee and commissions, we continue to have a very good performance in term of wealth management and protection. In April, there has been some turbulence driving from some announcement from The USA.

But starting from May and June, we had a very good recovery. And in terms of gross inflows, that is fundamental for our wealth management and protection activity, we are running above EUR 33,000,000,000 per quarter. So our expectation is to go in the range of €35,000,000,000 so to continue to have a very good contribution in terms of fee and commission coming from wealth management and protection. In this quarter, we had a reduction in terms of contribution from the activity in corporate investment banking that made a very good job in trading income, but some deals were postponed in the third and fourth quarter. So also in the area of corporate investment banking, we think to have the potential to increase also in the second part of the year.

So our expectation is to continue to have a very good trend, maintaining a double digit growth in terms of fee and commission coming from wealth management, protection and advisory and all the other commission can stay in low single digits. So on average, we can stay in mid single digit. That’s our expectation for this year. We will see during the next months, but the trend is there. Obviously, during the third quarter, you will have on August a pit stop in terms of revenues generation due to the fact that clients will be on holidays.

But our trend is clear, and our expectation is to have a strong contribution, both on net interest income and finished income.

Delphine Lee, Analyst, JPMorgan: Great. Thank you very much for the color.

Sarah, Conference Call Coordinator: Thank you. We will now take our next question. This is from Marco Nikolay from Jefferies. Please go ahead.

Marco Nikolay, Analyst, Jefferies: Good afternoon. Two questions from me. The first one is on the operational levers. So with the end of the current business plan approaching fast, I wanted to know if you had some early thoughts on the main areas you will focus on in view of the next plan. So you’re a bank that is delivering a ROTE in the 20% area, very well diversified business.

Your value is recognized by the market. So in a nutshell, what’s next for Intesa? And then I had the second question on the managerial actions expected in the last quarter of this year. I just wanted to know if you can give us more color on what you have in mind, both in terms of size of these actions and in terms of, let’s say, expected return? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you for your question. I will start from the managerial action, and then I will enter into the operational levers because there are a clear linkage between the managerial actions and the entering in the new business plan. So we are focused and all the investors know that if they want a bank in which they can invest for sustainable return forever, Intesa Sanpaolo is the best option. If you are looking for the short term yield or maximization of net income in short term Intesa Sanpaolo is not the right choice for you. So we want result to stay for the next twenty years.

And if we have possibility to have, as in this case, much net income coming from net interest income, from cost and from asset quality, we will devote this extra net income not to improve the outlook and the net income that we can distribute in the short term, but to create conditions for the next twenty years through business plan. So the level of managerial actions will be defined in the next quarters. It is too early to say a real figures, but could be significant. That’s our expectation. The area in which we can enter into a creation of sustainability, further sustainability for the future are the one in which we will have to focus in the new business plan.

What’s next for Intesa Sanpaolo? Next is Intesa Sanpaolo. Sorry to tell you this, but our business model is the right business model also for the next years. We obviously, we work into the possibility, and we have significant internal synergies, areas in which we can improve our profitability. But the business model will remain substantially the same, so wealth management, protection, advisory, asset gather.

So this is the job of Intesa Sanpaolo. This is the area in which we will continue to have a very good performance with the right mix between net interest income, commissions and insurance income. Then we will continue to have a very good corporate and investment banking team. That is the best way to have the perfect hedging for the revenue trend for the future. And technology and digital will remain the main driver in order to improve the service for the clients, but also the efficiency for the organization.

That is fundamental. We complete we will complete at the end of this year the EUR 5,000,000,000 investments in upgrading of technology, in easy take, in creation of a platform that can be best in class for the future, but it is not enough. So we will continue to invest in this area. Our target is to improve the condition to increase efficiency for the organization. And we started in this presentation to talk about sustainable 20% ROE bank.

This is in Tia Sao Paulo, and this will remain for the future. So we are a clear utility cash cow. I don’t know how do you want to call in terms of Sao Paulo. But for the future, we want to improve the conditions of our profitability, our efficiency through the work that we can do in terms of work with the right balancing between short term result and the long term results because the majority of our investors are institutional investors, pension fund, fundazione, in the face, all investors, they want to rely on a significant net income and dividends distribution, but forever, not only for the next six months. So my job and the job of Intesa Sanpaolo is to create conditions in order to improve our already very high profitability, but working on a significant portion of reserves that we already have in terms of efficiencies.

And the managerial actions will be used in order to improve this and to create condition in terms of integration charges in order to be in the best position also to exceed the 20% ROE for the future.

Marco Nikolay, Analyst, Jefferies: Thank you very much.

Sarah, Conference Call Coordinator: Thank you. We will now take our next question. This is from Ignacio Olargi Lopez from BNP Paribas Exane. Please go ahead.

: Thanks very much for the presentation and for taking my questions. I just have two questions. One on loan growth. Just touch upon a bit on the potential improvement of loan growth in the second half. Is there any chance that you can quantify a bit how the competition has been tracking loan growth potential?

And what should we expect in terms of lending growth into the coming quarters? And the second question on the deposit growth, there was a decline in the quarter, part of it explained by wholesale funding being maturing. Could you just elaborate a bit on how customer retail customer deposits have evolved? And how should we expect that in the context of healthy economic growth in Italy? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you. Just starting from loan growth and then elaborating on the net interest income and the customer with the proposed conditions. So on loan growth, we are in a phase in which today, especially starting from this month, there has been a reduction of pressure in terms of demonstrating just for the sake of marketing that you can have the best position in terms of the loan book growth for the fighting in the M and A world. Today, the conditions are coming to normality, and we are accelerating the loan book work, especially because we want to defend and to improve the markup situation of the organization. Our expectation is to be in a position to grow between 25% in the second part of the year so we can maintain a good trend in terms of loan growth.

We will see also what could be the implication from a real economy point of view of the transaction on tariffs. But my expectation is that at the end, there will be a good driver in terms of growth in Italy coming from the next generation new funds. And then do not forget that this quarter in Italy is particularly strong usually because the tourism is absolutely accelerating. So there is a very good momentum for our countries. Our expectation is so to be in a position to work in a very good way also on the loan book.

Coming on net interest income, the wholesale funding is something that we, for the time being, we have no intention to replace. The term that we have a portion of deposits that is expiring, and our attitude is to convert this term deposit into asset under management and asset under administration products. So reducing the cost of funding and increasing the commissions area. So my expectation is that looking at customer deposit, we should be in a position to have a good trend, both in terms of volume and in terms of final contribution to the economic figures of the group.

: Thank you very much.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Andrea Filtri from Mediobanca. Please go ahead.

Andrea Feltri, Analyst, Mediobanca: Hi. First question, if you could give us some visibility on the €96,000,000 financial component contribution in the quarter in NII. The second question would be on why did you stop giving guidance on your CET1? And allow me a third one. You have clarified you want to stay out of the current messy dynamic in M and A.

What would make you change your mind? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: I will not change my mind, Andreas. So the the the real point, and you are working in in an organization that is under this crazy world. So you you know better than me what what does can mean to have this dynamic with the long time. And I have to tell you that our attitude today is to stay absolutely without any kind of involvement and also because we have a significant antitrust problem in the country. So there is also there is a condition of of style.

So I think that what’s happening in Italy is absolutely something that I define far west, but I don’t like what it is happening in the country. And at the same time, I think that the the style of Intesa Sanpaolo is completely different compared to what it is happening in our country. When you look at the common equity Tier one ratio, we decided to change the presentation at this point because you remember that in the last presentation, we talked about 13.7%. In reality, our trend will give us a significantly much higher trend in terms of common equity. We generate between fifteen and twenty five basis points per quarter.

And it is likely that we can stay between 13.814% at the end of the year. The only point of attention in giving a guidance is the amount of loan book growth that we can have in the second quarter. So that’s the reason why we decided to not to give a clear position because there is uncertainty on the ability of increasing the loan book for the organization. But the trend is there, and the increase in terms of common equity will be significant. And so we will have further room to make a strategic decision in terms of capital redeployment.

But the majority of the point is that, as usual, we prefer not to give guidance in which we cannot be sure to be in a position to reach the target or to over deliver. The real point is there. So my expectation is that we can stay between 13.814%. This will be depending on the loan growth in during the second part of the year. In the financial component, we have a contribution that is coming from the increasing portfolio.

So if you look the figure of Intesa Sanpaolo and you compare the 2024 with the final data on the March, you have the increase in terms of nominal. Then on average, if you compare the March with the June, substantially, you have more or less the same amount. This has created condition to have the contribution during the second quarter that we had not during the first quarter. And then there is also something between EUR 10,000,000 and EUR 20,000,000 of contribution coming from nonperforming loans because we usually accrue the unlikely to pay the portion related to nonperforming loans, not in the first quarter, but in the second quarter. But it is really a marginal amount.

But this number are in line with what we declared to the market. We had possibility to create a good dynamics between the interest rate on the asset side and the interest rate on the liability side through this very good performance in terms of managing our medium term cost of funding. But I have to tell you that this can remain a good contributors to results, but we are relying on hedging medium term cost of funding reduction and then increase of loan book with conservative assumption of non GAAP that could be the positive surprise for the next six months.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Giovanni Razzoli from Deutsche Bank.

Giovanni Razzoli, Analyst, Deutsche Bank: Two questions on my side. The first one is on the CET1 ratio. You mentioned that you are generating a fifteen twenty basis points of capital every quarter, but you still have another 100 basis point of potential benefit from DTI absorption. I was wondering what is the time frame for the release of this capital? And from here, what do you think is an optimal level of capital for a bank like ISP, which has demonstrated a very resilient urban generation?

You are saying that profitability will remain well above 20% in the next couple of years regardless of any scenario. So I was wondering, from your internal perspective, to what level is the optimal CET1 ratio? And the second question is on the impact on the tariffs on Italian corporates. Clearly, with 20% market share, more or less, the loans in Italy, are a proxy of corporate Italy. Can you share with us what is your view about the recently announced agreement with the U.

S. States administration on the tariffs? Like what could be the impact on your asset quality? I’m sure you have done some analysis about the exposure to sectors, which can be impacted by tariffs. If you have kind of sensitivity to share, that would be great.

Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Yes. So I can start from the common equity generation, then I elaborate on the tariffs in which we made the work sector by sector for on the basis of what we know publicly on the tariffs. And so I will share with you also this view. On the common equity Tier one ratio, the generation of capital will be significant quarter by quarter. Then we will have 100 basis points DTAs that for the majority will be included in the common equity during the period of business plan.

So in reality, during the next business plan, we will have the equivalent of a capital increase of 100 basis points that could be available for all our strategic decision in terms of distribution of capital with shareholders. So I will move on the level of capital because it is clear that we are creating excess capital through the net income generation, but also through DTA. So we will end during the different years of the plan with an increasing excess capital position. The level of capital, I can confirm you, is a level that is in the range of 12%. So looking at all different figures stressing all the different condition.

And I think that you will have evidence also in the next stress test results that should be that could be out on Friday, I think. So in the next days, that our position is absolutely, in my opinion and for my expectation, should be confirmed very good. So the point of the capital position is linked with the business model of the organization and the stock of nonperforming loans. And in all these items, we are best practice. We are a company that is devoted to wealth management, protection, advisory with an amount maximum of nonperforming loans net of EUR 4,900,000,000.0, so zero for a bank like us with coverage ratio that are absolutely very good, 50%, and with no sign of reduction.

That’s the reason why we do not use the reduction of nonperforming loans coverage in order to increase the profitability of the organization. We think that having overlays that are there, Russia exposure, very limited. So no portion of overlays devoted to cover the Russia exposure. So we have a substantially real condition that can allow us to stay in a very good position also with a 12% or just above 12% common equity Tier one ratio. In the next vision plan, we will make all the analysis, we will make the confirmation of all this point, and we will remain with a point protection that is the redeployment of the excess capital of the organization because it is clear that with a trend of profitability above 12% ROE bank, with 100 basis points DTAs, we are a unique case in Europe in term and with the business model with very low risk attached with a significant contribution from fee and commission.

And with the right diversification, we are a unique case in Europe. Looking at tariffs, our analysis of the impact coming from tariffs was based already in our figures, outlook and estimates for a GDP of the Italian economy moving between 0.50.7% is already made on amount of average tariff of 14%, so it is 50%. So the analysis was made on this basis. And the confirmation is that the impact is not significant on the figures of the bank. We will remain with the cost of risk at the end of the year that could be in the range of 30 basis points, that could be moved 35 basis with a portion of deleveraging that we can accelerate if we decide to accelerate.

But from a structural point of view, the impact in our view will be not so significant. So this is our perception significant in the sense of having a substantial impact on our figures in the last sector that can be impacted. But we are talking about reduction of revenues for some counterparties. In my expectation, a number of companies will move using the pricing levels if they have high quality product. Otherwise, they will have to make a diversification of their sources of ability to make export outside of Italy.

But apart from specific areas, we do not see significant threats coming from this sector due to the very high profitability, the very low level of indebtedness of the company in Italy and the very high level of deposits placed with the banking sector by all the companies in Italy.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Britta Schmidt from Autonomous Research. Please go ahead.

Britta Schmidt, Analyst, Autonomous Research: Yes. Hi, there. A couple of questions from me. Two follow ups on the NII. How should we look at the progression in terms of the next couple of quarters?

Would you expect net interest income to increase sequentially in Q3 and Q4 and then increase in 26% growing on an annualized Q4 level? The other question on one of the interest income and balance sheet trends is with the expectation of some loan growth, would you expect deposit growth to trend in line since if you are looking to convert some of the deposits into AUMs in the future, does it mean you will have to increase your wholesale issuance? Or do you think you can compensate that with nominal deposit growth? And then just lastly, maybe you can share a little bit your thoughts in terms of what’s going on in the market with all of the M and A that we’re seeing in Italy. Can you provide any color on what is happening with regards to investment banking and financial adviser hiring?

Have you witnessed any movements? Or have you been able to benefit from any movements, either in terms of staffing or also client moves? So

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: I will start from the And I made a clear statement at the beginning of this of Far West M and A in Italy that we will not the timing, I clearly said that we will not participate, but we are in a condition to increase our market share through the hiring of people from other companies. And this is what, in reality, has happened, especially in the sector of private banking, wealth management and fideogram. So we made a campaign of acquisition of people that will not like to stay with medium sized bank and want to remain in AAA perceived company by the clients. So that’s something that has a important portion of this is in our net inflows in this quarter, and we will continue during the next quarters due to the fact that this unbelievable Far West saga will continue also in the next months.

So that’s on M and A. The second point is on loan growth, deposit growth. Loan growth will continue. That’s our expectation, as I told clearly, with an amount that in terms of percentage is not so significant, but will continue between 25%. In terms of deposit growth, we have we will continue to have an increase in terms of deposits.

So we have no need to go into the wholesale market from just to finance just to finance the loan book for the next six months. And in the future, obviously, we will continue to have a funding plan because the organization has, by definition, a funding plan. But there’s no need to use wholesale funding to increase the loan book size in the organization. In the trend of net interest income, for sure, we will have a growth in 2026, and that’s for sure. In the next quarters, this will depend by the mix between the security portfolio and the net interest income.

But our expectation is there could be a slight reduction during the third quarter and an increase during the fourth quarter. More or less, this should be a trend. But believe me, it is not easy to make a forecast on a quarterly trend. In the next six months, the performance will be very good and will bring us to have a well above final point in comparison with the 2023 figures.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Andrea Lucey from Equita. Please go ahead.

Andrea Lussi, Analyst, Equita: Hi, thank you for taking my question. The first one is on if you can quantify provide us an idea of the amount of annualized capital gain that you have in your portfolio? And how do you plan to manage it manage them also considering the trade off between NII and trading? The second question is on the managerial action in the fourth quarter. Last year, we have seen significant kind, significant one rating that involved potentially lots of people, no voluntary exit and people leaving the company just before the normal age of retirement.

So just to have an idea if, there is still a large room to make, actions like the ones that you have made, last, last year. Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So we do not give figures on the capital gains, but there are room for further capital gain in our portfolio. But our expectation is that we will continue to maintain a contribution from net interest income. And in trading income, we’ll not move a significant portion of net interest income deriving from security portfolio. In any case, we will continue to have a trend also in trading, but we will see the speed during the further two quarters. In terms of managerial elections, the areas are obviously mainly concentrated on the cost side.

There will be write off of portion of the IT system procedures. Do not forget that we are entering into the easy tech world. And in the easy tech world, we will have the possibility to have a significant cost reduction through the usage of the cloud. And so a portion a significant portion of the maintenance in cost, the areas in which we had a procedure related with mainframe can be analyzed in order to make a write off before maintaining all the system on the cloud. So there’s a portion of potential usage of managerial action.

Then we have a number of people that we decided not to allow in term of exit from the organization. So they have asked during the previous agreement with the trade unions to leave the organization, and we were not in a position to accept their willingness to go outside the organization. We will evaluate this. Obviously, we will involve also the trade unions in this process if this process will be something in which we will decide that could be the right way to move, but it could be voluntary. And we have already people that asked to leave the organization in the previous agreement.

So there are number of areas in which we have possibility to create conditions to improve profitability for the future, for the organization without any social impact, but being maintaining our people happy to stay or to leave the organization. At the same time, the easy tech platform is the real big potential cost reduction that we will have during the next business plan.

Britta Schmidt, Analyst, Autonomous Research: Thank you.

Sarah, Conference Call Coordinator: Thank you. And the last question today is from Ignacio Cerezo from UBS. Please go ahead.

Ignacio Cerezo, Analyst, UBS: Yes. Hi. Good afternoon. Thank you for taking my question. I only have one, actually.

So it’s around the upfront fee and the market fees. So billing and placement of securities is another very strong quarter, March, only a small decline from a very high base in Q1. So if you can give us a breakdown of that number and if you can let us know actually how sustainable you think that number is into the future. Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Yes. These commissions are a mix between very good performance in terms of gross inflows coming from our clients. And remember, with a portion of the month of April that was affected by the conditions of the tariff coming from The USA and so the dynamics of volatility of the market. This is part of a job in which we have already and all the people in the field of the organization have the clear capital gain position of our clients in moving their portfolio. That is the real point of strength of Intesa Sanpaolo.

And this, in our expectation, will continue at this trend. We had some marginal reduction in terms of placement of bonds, third party bonds, including the BTP bonds because during this quarter, the number of issuance was lower than in the first quarter, but our expectation is also to have a rebound also in this line. So the gross inflows, net inflows in this area of placing are the main drivers of this component of our economic figures.

Ignacio Cerezo, Analyst, UBS: Thank you.

Sarah, Conference Call Coordinator: Thank you. There are no further questions at this time. So I would like to hand the call back to Mr. Messina for any closing comments.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you very much for your continued support. I want just to finish with the title of our presentation, We are a sustainable 20% ROE bank with EUR 1,400,000,000,000.0 in customer financial assets. So thank you very much, and Thank you.

Sarah, Conference Call Coordinator: Thank you. This concludes today’s conference call. Thank you for participating, and you may now disconnect.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Welcome to our first half twenty twenty five results conference call. This is Carlo Messina, Chief Executive Officer and I’m here with Luca Boca, our CFO and Marco Delfrat and Andrea Tamagnini, Investor Relations Officers. We are navigating the current geopolitical uncertainty from a position of strength, thanks to our resilient and well balanced business model. In fact, we just delivered our best ever six month net income at EUR 5,200,000,000.0. That means a return on equity of 20%, so return on equity of 20%, 24% on tangible.

Earnings per share grew 12% on a yearly basis. Net income in the second quarter was also the best ever at €2,600,000,000 These top notch results are marked by record high commissions and insurance income. And net interest income grew strongly in the second quarter even as rates declined, and we continue to manage revenues in an integrated manner. I want to stress that Italian economy continues to show strong resilience. Italian SMEs are much stronger, and public and EU driven investments are supporting growth that we are ready to finance.

Looking ahead, we are upgrading our 2025 net income guidance to well above EUR 9,000,000,000, including Q4 managerial actions to strengthen future profitability. Intesa Sanpaolo offers one of the highest shareholder return in Europe. This year, we will distribute no less than EUR 8,200,000,000.0, considering the over EUR 3,000,000,000 final dividend paid in May, the EUR 2,000,000,000 buyback launched in June and the EUR 3,200,000,000.0 interim dividend to be paid in November. An additional capital distribution will be quantified at the end of the year, in line with our practice. Costs are down.

Asset quality remains top notch. We confirmed our best in class capital generation capabilities, and customer financial assets grew EUR 37,000,000,000 on a yearly basis, of which EUR 12,000,000,000 in Q2. We are delivering strong internal synergies avoiding risks related to acquisitions. I’m proud of these results and thank our people for their excellent contribution. Let me underline that our strong profitability allow us to continue holding a world class position in social impact to fight poverty and reduce inequalities.

Now let’s turn to Slide one for the key achievements of the first six months. Slide one. In the first half, we delivered record high net income and revenues, lowest ever costincome ratio, NPL ratios at historical lows, strong growth in common equity ratio and high increasing and sustainable value creation. Slide two. In this slide, you can see the strong and continuous increase in net income that has more than doubled in five years.

Slide three. In the first half, we delivered a significant and sustainable increase in return on equity, earnings per share, dividends per share and tangible book value per share. Slide four. Thanks to our excellent six months performance, we are in an affordable position to upgrade the 2025 net income to well above EUR 9,000,000,000, including Q4 managerial action to strengthen future profitability. Moreover, we clearly have significant excess capital, giving us a lot of flexibility for future additional distributions.

Slide number five. Our performance allow us to benefit all our stakeholders and strongly support the fight against poverty and inequalities. In the first first half, families and businesses received EUR 42,000,000,000 in new medium long term lending, up 44% in Italy on a yearly basis. Let’s now move to Slide seven for more details on our first half results. Slide seven.

In a nutshell, net income was up 9% in the first six months, and we accrued EUR 3,700,000,000.0 in cash dividends. Slide eight. This slide shows the building blocks of the first half P and L with improved results across nearly all items. Please turn to the next slide for a look at our second quarter results, Slide nine. Very briefly, in the second quarter, net interest income grew 5% quarterly.

Revenues reached the record high with non motor P and C revenues up 15% on a yearly basis. Net income was the best Q2 result ever, up 6% versus the same quarter last year. Slide 10. In the first half, revenues were up despite the strong decline in market interest rates, thanks to our well diversified and resilient business model. Slide 11.

Net interest income was very resilient in the first half, and we raised our guidance for this year to a level well above 2023, with further growth expected next year, also thanks to the contribution from core deposits hedging. Slide number 12. In this slide, you can also see the quarter on quarter increase in net interest income despite the further reduction in Euribor. The growth drivers are the spread component that includes the contribution from core deposit hedging, the financial component mainly driven by the higher contribution from the securities portfolio and the volume component that also benefited from the growth in loan volume in the quarter. Slide 13.

Customer financial assets were up strongly on a yearly and quarterly basis. In the quarter, we had more than EUR 6,000,000,000 growth in assets under management despite the market volatility due to tariffs, and we can count on our unmatched client advisory network to drive future growth. Over EUR 900,000,000,000 in net deposit and assets under administration are already fueling our wealth management, protection and advisory businesses. Let’s now move to Slide 14. In the first six months, commissions were up 5% yearly, with a nine percent growth in wealth management portion.

Our fully owned product factories are a clear competitive advantage, and our top notch advisory services are stabilizers for the high end of market volatility on fees, with over 30% growth in related additional commissions. Please turn to the next slide for a closer look at insurance income. Slide 15. Non motor P and C contribution was the main driver for insurance income growth, and we still have significant upside potential with both individuals and corporate clients.

The contribution from commissions and insurance income to revenues is by far the highest in Europe after UBS. Please turn to Slide 17. The costincome ratio was the best ever at 38%. So please turn to Slide 18 for a closer look at the breakdown of costs. Operating costs were down despite the impact of the national labor contract renewal and depreciation linked to tech investments.

Personnel costs decreased 1% and administrative costs 0.7%. We achieved an almost 3,400 headcount activation in the first half of the year. Slide 19. We have high flexibility to further reduce costs, thanks to our By 2027, we will have 9,000 exits with savings of EUR 500,000,000. 9,000 exits are equal to the ones deriving from the UBI merger.

Slide 20, we have the best in class costincome ratio in Europe. And now let’s move to Slide 21 for a look at our asset quality. Slide 21. Asset quality remained excellent. Inflows are at historical lows, and NPL stocks further declined in the quarter.

Slide 22. Our NPL stock ratios are clearly among the best in Europe. Slide 23. As you can see, we are also very well positioned in terms of Stage two. Slide 24.

Our annualized cost of risk is just 24 basis points, with no overlays released NPL coverage ratio at 50%. We see no signs of asset quality deterioration. Slide 25. After quarter by quarter, we keep reducing our Russia exposure, down to less than 0.1% of the group’s total loans, with local loans close to zero. Slide 26 for an update on capital.

26. In the first half, the common equity ratio increased by 65 basis points to 13.5% and will increase further in the coming quarters. In the next three slides, you have the usual update on our sound liquidity position and ESG actions with additional slides on our leading ESG position in the appendix. But let’s move to Slide 31 to see how ISP is fully equipped to succeed in any scenario. Slide 31.

Our profitability and capital position remains strong even in adverse conditions. We have a very resilient and efficient business model, and we have already deployed EUR 4,600,000,000.0 in tech investments, including artificial intelligence, key enablers for future and further efficiency gains. Our net NPL stock is just EUR 4,900,000,000.0, and we can count on EUR 900,000,000 in overlays. Last but not least, the management team has a strong track record in delivering results. Slide 32.

Intesa Sanpaolo stands out in Europe across key metrics and is better positioned than peers to face any future challenge. Slide thirty two thirty three. In this slide that we share every quarter, you can appreciate our unique positioning, thanks to our commissions driven and efficient business model, supported by strong tech investments. Let’s move to Slide 34 for a few words on the strength of the Italian economy. The Italian economy remains resilient, supported by export oriented and highly diversified companies, a strong banking system, high household wealth and low private debt, employment and activity rates at their highest levels and continued EU public investments.

So we expect Italian GDP to grow this year and next year. Slide 35. Italian companies are in a stronger position and more resilient to external shocks today compared to the past, even considering tariffs. Their debt to equity ratio has decreased over time, and their liquidity buffers are at all time highs. Please turn to Slide 37.

This slide offers a recap of our best ever six months and the reasons why we are fully equipped to succeed in the future. To finish, please turn to Slide 38 for the outlook. Slide 38. Thanks to our excellent six months performance, we are in a comfortable position to upgrade the full year net income guidance to well above EUR 9,000,000,000, including Q4 managerial actions to strengthen future profitability. This is a level we consider fully sustainable in the years ahead.

As always, we will continue to manage revenues in an integrated manner, maintaining a strong focus on cost efficiency, asset quality and the sustainability of results. We are delivering one of the highest capital returns and dividend yields in European banking while maintaining rock solid capital and continuing to lead on social impact. We clearly have strong internal capital generation and excess capital. An additional distribution will be determined at year end. So thank you for your attention.

And now we are happy to take your question. So thank you.

Sarah, Conference Call Coordinator: Thank you. You. We will now start with our first question. This is from Delphine Lee from JPMorgan. Please go ahead.

Delphine Lee, Analyst, JPMorgan: Yes, good afternoon. Thank you for taking my questions. My first one is on net interest income, please. Just wanted to understand a little bit what’s driving the I mean, clearly, had a very good quarter with more resilient trends, but just wanted to have a bit more color on the improvement in the guidance that you’ve given of well above 23 level. And then secondly, on fees and commission, so is your your target for this year to still grow mid single digits?

If you just wouldn’t mind commenting on the underlying moving parts of that as well. Thank you very much.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you, Delfin. Looking starting from net interest income, that is the most important part of the upgrading of our outlook, but not only for 2025, especially for 2026. So we are now working on the new business plan, And the preparation of the plan is part of the story that we are starting to create from this quarter in terms of final result for 2025 in order to prepare the new business plan. So in net interest income is the area in which we are continuing to have a very good performance in terms of core hedging facilities. So the contribution of core hedging is very positive and due to be very positive.

And our expectation is that we remain positive also during 2026. At the same time, we worked in order to optimize the medium term cost of funding because we had some wholesale sales laggards during the first quarter, and we didn’t replace and our expectation is not to replace this medium term funding. This has created condition to have a positive impact on net interest income, and this will remain also for the next years. Our expectation is also that looking at the commercial activities, we have since started to have recoveries in terms of loan growth. So there is a clear reduction of the competitive pressures coming from this crazy M and A attitude that we had in Italy in the last months.

We started again to have growth, especially in terms of new medium term lending. Then we have some portion of portfolio expiring, but we replaced so we are starting to have a momentum of growth in terms of loan book portfolio, especially related with the area that are more involved into the next generation EU funds. So it’s something that is based on companies in very, very good, very positive and good shape. So with a limited impact coming from potential future nonperforming loans. This trend, in our expectation, will continue also in the next quarters, and this can prepare for a further growth in 2026 of the level of net interest income.

At the same time, as announced in the first quarter, in which we increased the size of the security portfolio, we are now having in this quarter the first impact of the improved conditions of the security portfolio. You remember that in the last years, we reduced in a significant way the portfolio. So we replaced a portion of the portfolio in this first semester. And so we are also maintaining a good contribution in terms of the net income coming from the security portfolio. Our expectation is that if interest rate will remain in the range of average 2%, you’re right.

But and then with a slight reduction during 2026, we can continue to have a very good performance. And net interest income can continue to be a good contributor to our results. So just a focus on a managerial way of managing the wealth management of the company. Today, deposits are continue to give a 2% a very good contribution in terms of markdowns, so with the reduction, but we get very good contribution. So we are also looking at the right attention to the conversion of the portion of deposits into wealth management products.

We have a selective portion of these deposits, especially term deposit that can be converted. But for the time being, we are also working in term of maximization of the relation between net interest income and fee and commissions. So moving into fee and commissions, we continue to have a very good performance in term of wealth management and protection. In April, there has been some turbulence driving from some announcement from The USA. But starting from May and June, we had a very good recovery.

And in terms of gross inflows, that is fundamental for our wealth management and protection activity, we are running above EUR 33,000,000,000 per quarter. So our expectation is to go in the range of €35,000,000,000 so to continue to have a very good contribution in terms of fee and commission coming from wealth management and protection. In this quarter, we had a reduction in terms of contribution from the activity in corporate investment banking that made a very good job in trading income, but some deals were postponed in the third and fourth quarter. So also in the area of corporate investment banking, we think to have the potential to increase also in the second part of the year. So our expectation is to continue to have a very good trend, maintaining a double digit growth in terms of fee and commission coming from wealth management, protection and advisory and all the other commission can stay in low single digits.

So on average, we can stay in mid single digit. That’s our expectation for this year. We will see during the next months, but the trend is there. Obviously, during the third quarter, you will have on August a pit stop in terms of revenues generation due to the fact that clients will be on holidays. But our trend is clear, and our expectation is to have a strong contribution, both on net interest income and finishing

Delphine Lee, Analyst, JPMorgan: Great. Thank you very much for the color.

Sarah, Conference Call Coordinator: Thank you. We will now take our next question. This is from Marco Nikolay from Jefferies. Please go ahead.

Marco Nikolay, Analyst, Jefferies: Afternoon. Two questions from me. The first one is on the operational levers. So with the end of the current business plan approaching fast, I wanted to know if you had some early thoughts on the main areas you will focus on in view of the next plan. So you’re a bank that is delivering a ROTE in the 20% area, very well diversified business.

Your value is recognized by the market. So in a nutshell, what’s next for Intesa? And then I had the second question on the managerial actions expected in the last quarter of this year. I just wanted to know if you can give us more color on what you have in mind, both in terms of size of these actions and in terms of, let’s say, expected return? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you for your question. I will start from the managerial action, and then I will enter into the operational levers because there are a clear linkage between the managerial actions and the entering in the new business plan. So we are focused and all the investors know that if they want a bank in which they can invest for sustainable return forever, Intesa Sanpaolo is the best option. If you are looking for the short term yield or maximization of net income in short term Intesa Sanpaolo is not the right choice for you. So we want result to stay for the next twenty years.

And if we have possibility to have, as in this case, much net income coming from net interest income, from cost and from asset quality, we will devote this extra net income not to improve the outlook and the net income that we can distribute in the short term, but to create conditions for the next twenty years through business plan. So the level of managerial actions will be defined in the next quarters. It is too early to say a real figures, but could be significant. That’s our expectation. The area in which we can enter into creation of sustainability, further sustainability for the future are the one in which we will have to focus in the new business plan.

What’s next for Intesa Sanpaolo? Next is Intesa Sanpaolo. Sorry to tell you this, but our business model is the right business model also for the next years. We obviously, we work into the possibility, and we have significant internal synergies, areas in which we can improve our profitability. But the business model will remain substantially the same, so wealth management, protection, advisory, asset gather.

So this is the job of Intesa Sanpaolo. This is the area in which we will continue to have a very good performance with the right mix between net interest income, commissions and insurance income. Then we will continue to have a very good corporate and investment banking team that is the best way to have the perfect hedging for the revenue trend for the future. And technology and digital will remain the main driver in order to improve the service for the clients, but also the efficiency for the organization. That is fundamental.

We complete we will complete at the end of this year the EUR 5,000,000,000 investments in upgrading of technology, in easy tech, in creation of a platform that can be best in class for the future, but it is not enough. So we will continue to invest in this area. Our target is to improve the condition to increase efficiency for the organization. And we started in this presentation to talk about sustainable 20% ROE bank. This is in Tia Sao Paulo, this will remain for the future.

So we are a clear utility cash cow. I don’t know how do you want to call Intesa Sanpaolo. But for the future, we want to improve the conditions of our profitability, our efficiency through the work that we can do in terms of work with the right balancing between short term result and the long term results because the majority of our investors are institutional investor, pension fund, fundazione, in the face, all investors that want to rely on a significant net income and dividends distribution, but forever, not only for the next six months. So my job and the job of Intesa Sanpaolo is to create conditions in order to improve our already very high profitability, but working on a significant portion of reserves that we already have in terms of efficiencies. And the managerial actions will be used in order to improve this and to create condition in terms of integration charges in order to be in the best position also to exceed the 20% ROE for the future.

Marco Nikolay, Analyst, Jefferies: Thank you very much.

Sarah, Conference Call Coordinator: Thank you. We will now take our next question. This is from Ignacio Olargi Lopez from BNP Paribas Exane. Please go ahead.

: Thanks very much for the presentation and for taking my questions. I just have two questions. One on loan growth. Just touch upon a bit on the potential improvement of loan growth in the second half. There any chance that you can quantify a bit how the competition has been tracking loan growth potential?

And what should we expect in terms of lending growth into the coming quarters? And the second question on the deposit growth, there was a decline in the quarter, part of it explained by also funding being maturing. Could you just elaborate a bit on how customer retail customer deposits have evolved? And how should we expect that in the context of healthy economic growth in Italy? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you. Just starting from loan growth and then elaborating on the net interest income and the customer with the post conditions. So on loan growth, we are in a phase in which today, especially starting from this month, there has been a reduction of pressure in terms of demonstrating just for the sake of marketing that you can have the best position in terms of the loan book growth for the fighting in the M and A world. Today, the conditions are coming to normality, and we are accelerating the loan book work, especially because we want to defend and to improve the markup situation of the organization. Our expectation is to be in a position to grow between 25% in the second part of the year so we can maintain a good trend in terms of loan growth.

We will see also what could be the implication from a real economy point of view of the transaction on tariffs. But my expectation is that at the end, there will be a good driver in terms of growth in Italy coming from the next generation new funds. And then do not forget that this quarter in Italy is particularly strong usually because the tourism is absolutely accelerating. So there is a very good momentum for our countries. Our expectation is so to be in a position to work in a very good way also on the loan book.

Coming on net interest income, the wholesale funding is something that we, for the time being, we have no intention to replace. The term that we have a portion of TEP deposits that is expiring, and our attitude is to convert this term deposit into asset under management and asset under administration products. So reducing the cost of funding and increasing the commissions area. So my expectation is that looking at customer deposit, we should be in a position to have a good trend, both in terms of volume and in terms of final contribution to the economic figures of the group.

: Thank you very much.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Andrea Feltri from Mediobanca. Please go ahead.

Andrea Feltri, Analyst, Mediobanca: Hi. First question, if you could give us some visibility on the €96,000,000 financial component contribution in the quarter in NII. The second question would be on why did you stop giving guidance on your CET1? And allow me a third one. You have clarified you want to stay out of the current messy dynamic in M and A.

What would make you change your mind? Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: I will not change my mind, Andreas. So the the the real point, and you are working in in an organization that is under this crazy world. So you you know better than me what what does can mean to have this dynamic with the long time. And I have to tell you that our attitude today is to stay absolutely without any kind of involvement and also because we have a significant antitrust problem in the country. So there is also there is a condition of of style.

So I think that what’s happening in Italy is absolutely something that I define the Far West, but I don’t like what it is happening in the country. And at the same time, I think that the the style of Intesa Sanpaolo is completely different compared to what it is happening in our country. Okay. Look at the common equity Tier one ratio, we decided to change the presentation at this point because you remember that in the last presentation, we talked about 13.7%. In reality, our trend will give us a significantly much higher trend in terms of common equity.

We generate between fifteen and twenty five basis point per quarter. And it is likely that we can stay between 13.814% at the end of the year. The only point of attention in giving a guidance is the amount of loan book growth that we can have in the second quarter. So that’s the reason why we decided to not to give a clear position because there is uncertainty on the ability of increasing the loan book for the organization. But the trend is there, and the increase in terms of common equity will be significant.

And so we will have further room to make a strategic decision in terms of capital redeployment. But the majority of the point is that, as usual, we prefer not to give guidance in which we cannot be sure to be in a position to reach the target or to over deliver. The real point is there. So my expectation is that we can stay between 13.814%. This will be depending on the loan growth in during the second part of the year.

In the financial component, we have a contribution that is coming from the increasing portfolio. So if you look at the figure of Intesa Sanpaolo, you compare the 2024 with the final data on the March, you have the increase in terms of nominal. Then on average, if you compare the March with the June, substantially, you have more or less the same amount. This has created condition to have the contribution during the second quarter that we had not during the first quarter. And then there is also something between EUR 10,000,000 and 20,000,000 of contribution coming from nonperforming loans because we usually accrue the unlikely to pay the portion related to nonperforming loans, not in the first quarter, but in the second quarter.

But it is really a marginal amount. But this number are in line with what we declared to the market. We had possibility to create a good dynamics between the interest rate on the asset side and the interest rate on the liability side through this very good performance in terms of managing our medium term cost of funding. But I have to tell you that this can remain a good contributor to the results, but we are relying on hedging medium term cost of funding reduction and then increase of loan book with conservative assumption. But for long have next six months.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Giovanni Razzoli from Deutsche Bank. Please go ahead.

Giovanni Razzoli, Analyst, Deutsche Bank: Two questions on my side. The first one is on the CET1 ratio. You mentioned that you are generating a fifteen twenty basis points of capital every quarter, but you still have another 100 basis point of potential benefit from DTI absorption. I was wondering what is the time frame for the release of this capital? And from here, what do you think is an optimal level of capital for a bank like ISP, which has demonstrated a very resilient urban generation?

You are saying that the profitability will remain well above 20% in the next couple of years regardless of any scenario. So I was wondering, from your internal perspective, to what level is the optimal CET1 ratio? And the second question is on the impact on the tariffs on Italian corporates. Clearly, with 20% market share, more or less, on the loans in Italy, are a proxy of corporatifari. Can you share with us what is your view about the recently announced agreement with the U.

S. States administration on the tariffs? Like what could be the impact on your asset quality? I’m sure you have done some analysis about the exposure to sectors which can be impacted by tariffs. If you have kind of sensitivity to share, that would be great.

Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Yes. So I can start from the common equity generation, then I elaborate on the tariffs in which we made the work sector by sector for on the basis of what we know publicly on the tariffs. And so I will share with you also this with you. On the common equity Tier one ratio, the generation of capital will be significant quarter by quarter. Then we will have 100 basis points DTAs that for the majority will be included in the common equity during the period of the next business plan.

So in reality, during the next business plan, we will have the equivalent of a capital increase of 100 basis points that could be available for all our strategic decision in terms of distribution of capital with shareholders. So I will move on the level of capital because it is clear that we are creating excess capital through the net income generation, but also through DTA. So we will end during the different years of the plan with an increasing excess capital position. The level of capital, I can confirm you, is a level that is in the range of 12%. So looking at all different figures stressing all the different condition.

And I think that you will have evidence also in the next stress test results that should be that could be out on Friday. I think so in the next days that our position is absolutely, in my opinion and for my expectation, should be confirmed very good. So the point of the capital position is linked with the business model of the organization and the stock of nonperforming loans. And in all these items, we are best practice. We are a company that is devoted to wealth management, protection, advisory with an amount maximum of nonperforming loans net of EUR 4,900,000,000.0, so zero for a bank like us with the coverage ratio that are absolutely very good, 50%, and with no sign of reduction.

That’s the reason why we do not use the reduction of nonperforming loans coverage in order to increase the profitability of the organization. We think that having overlays that are there, Russia exposure, very limited. So no portion of overlays devoted to cover the Russia exposure. So we have a substantially real condition that can allow us to stay in a very good position also with a 12% or just above 12% common equity Tier one ratio. In the next vision plan, we will make all the analysis, we will make the confirmation of all this point, and we will remain with a point of protection that is the redeployment of the excess capital of the organization because it is clear that with a trend of profitability above 12% ROE bank, with 100 basis points DTAs, we are a unique case in Europe in term and with the business model with very low risk attached with a significant contribution from fee and commission.

And with the right diversification, we are a unique case in Europe. Looking at tariffs, our analysis of the impact coming from tariffs was based already in our figures, outlook and estimates for a GDP of the Italian economy moving between 0.50.7% is already made on amount of average tariff of 14%, so it is 50%. So the analysis was made on this basis. And the confirmation is that the impact is not significant on the figures of the bank. We will remain with the cost of risk at the end of the year that could be in the range of 30 basis points, that could be moved 35 basis with a portion of deleveraging that we can accelerate if we decide to accelerate.

But from a structural point of view, the impact in our view will be not so significant. So this is our perception significant in the sense of having a substantial impact on our figures, then there are sectors that can be impacted. But we are talking about reduction of revenues for some counterparties. In my expectation, a number of companies will move using the pricing levels if they have high quality product. Otherwise, they will have to make a diversification of their sources of ability to make export outside of Italy.

But apart from specific areas, we do not see significant threats coming from this sector due to the very high profitability, the very low level of indebtedness of the company in Italy and the very high level of deposits placed with the banking sector by all the companies in Italy.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Britta Schmidt from Autonomous Research. Please go ahead.

Britta Schmidt, Analyst, Autonomous Research: Yes. Hi, there. A couple of questions from me. Two follow ups on the NII. How should we look at the progression in terms of the next couple of quarters?

Would you expect net interest income to increase sequentially in Q3 and Q4 and then increase in 26% growing on an annualized Q4 level? The other question on one of the interest income and balance sheet trends is with the expectation of some loan growth, would you expect deposit growth to trend in line since if you are looking to convert some of the deposits into AUMs in the future, does it mean you will have to increase your wholesale issuance? Or do you think you can compensate that with nominal deposit growth? And then just lastly, maybe you can share a little bit your thoughts in terms of what’s going on in the market with all of the M and A that we’re seeing in Italy. Can you provide any color on what is happening with regards to investment banking and financial adviser hiring?

Have you witnessed any movements? Or have you been able to benefit from any movements, either in terms of staffing or also client moves? So

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: I will start from the And I made a clear statement at the beginning of this of Far West M and A in Italy that we will not at the timing, I clearly said that we will not participate, but we are in a condition to increase our market share through the hiring of people from other companies. And this is what, in reality, has happened, especially in the sector of private banking, wealth management and fideveram. So we made a campaign of acquisition of people that will not like to stay with medium sized bank and want to remain in AAA perceived company by the clients. So that’s something that has a important portion of this is in our net inflows in this quarter, and we will continue during the next quarters due to the fact that this unbelievable Far West saga will continue also in the next months.

So that’s on M and A. The second point is on loan growth, deposit growth. Loan growth will continue. That’s our expectation, as I told clearly, with an amount that in terms of percentage is not so significant, but will continue between 25%. In terms of deposit growth, we will continue to have an increase in terms of deposits.

So we have no need to go into the wholesale market from just to finance the loan book for the next six months. And in the future, obviously, we will continue to have a funding plan because the organization has, by definition, a funding plan. But there’s no need to use wholesale funding to increase the loan book size in the organization. In the trend of net interest income, for sure, we will have a growth in 2026. And that’s for sure.

In the next quarters, this will depend by the mix between the security portfolio and the net interest income. But our expectation is there could be a slight reduction during the third quarter and an increase during the fourth quarter. More or less, this should be the trend. But believe me, it is not easy to make a forecast on a quarterly trend. In the next six months, the performance will be very good and will bring us to have a well above final point in comparison with the 2023 figures.

Giovanni Razzoli, Analyst, Deutsche Bank: Thank you.

Sarah, Conference Call Coordinator: Thank you. We will now take the next question. This is from Andrea Lussi from Equita. Please go ahead.

Andrea Lussi, Analyst, Equita: Hi, thank you for taking my question. The first one is on if you can quantify, provide us an idea of the amount of annualized capital gain that you have in your portfolio? And how do you plan to manage it manage them also considering the trade off between NII and trading? The second question is on the managerial action in the fourth quarter. Last year, we have seen a significant kind, significant one rating that involved potentially lots of people, no voluntary exit and people leaving the company just before the normal age of retirement.

So just to have an idea if there is still a large room to make actions like the ones that you have made last year. Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So we do not give figures on the capital gains, but there are room for further capital gain in our portfolio. But our expectation is that we will continue to maintain a contribution from net interest income. And in trading income, we’ll not move a significant portion of net interest income deriving from security portfolio. In any case, we will continue to have a trend also in trading, but we will see the speed during the further two quarters. In terms of managerial elections, the areas are obviously mainly concentrated on the cost side.

There will be write off of a portion of the IT system procedures. Do not forget that we are entering into the easy tech world. And in the easy tech world, we will have the possibility to have a significant cost reduction through the usage of the cloud. And so a portion a significant portion of the maintenance in cost, the areas in which we had a procedure related with mainframe can be analyzed in order to make a write off before maintaining all the system on the cloud. So there’s a portion of potential usage of managerial action.

Then we have a number of people that we decided not to allow in term of exit from the organization. So they have asked during the previous agreement with the trade unions to leave the organization, and we were not in a position to accept their willingness to go outside the organization. We will evaluate this. Obviously, we will involve also the trade unions in this process if this process will be something in which we will decide that could be the right way to move, but it could be voluntary. And we have already people that asked to leave the organization in the previous agreement.

So there are number of areas in which we have possibility to create conditions to improve profitability for the future, to lose for the organization without any social impact, but being maintaining our people happy to stay or to leave the organization. At the same time, the easy tech platform is the real big potential cost reduction that we will have during the next business plan.

Britta Schmidt, Analyst, Autonomous Research: Thank you.

Sarah, Conference Call Coordinator: Thank you. And the last question today is from Ignacio Cerezo from UBS. Please go ahead.

Ignacio Cerezo, Analyst, UBS: Yes. Hi. Good afternoon. Thank you for taking my question. I only have one, actually.

So it’s around the upfront fee and the market fees. So billing and placement of securities is another very strong quarter, $360,000,000, only a small decline from a very high base in Q1. So if you can give us a breakdown of that number and if you can let us know actually how sustainable you think that number is into the future. Thank you.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: Yes. These commissions are a mix between very good performance in terms of gross inflows coming from our clients. And remember, with a portion of the month of April that was affected by the conditions of the tariff coming from The U. S. A.

And so the dynamics of volatility of the market. This is part of a job in which we have already and all the people in the field of the organization have the clear capital gain position of our clients in moving their portfolio. That is the real point of strength of Intesa Sanpaolo. And this, in our expectation, will continue at this trend. We had some marginal reduction in terms of placement of bonds, third party bonds, including the BTP bonds because during this quarter, the number of issuance was lower than in the first quarter, but our expectation is also to have a rebound also in this line.

So the gross inflows, net inflows in this area of placing are the main drivers of this component of our economic figures.

Ignacio Cerezo, Analyst, UBS: Thank you.

Sarah, Conference Call Coordinator: Thank you. There are no further questions at this time. So I would like to hand the call back to Mr. Messina for any closing comments.

Carlo Messina, Chief Executive Officer, Intesa Sanpaolo: So thank you very much for your continued support. I want just to finish with the title of our presentation, We are a sustainable 20% ROE bank with EUR 1,400,000,000,000.0 in customer financial assets. So thank you very much, and thank you.

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