Intesa Sanpaolo SpA (ISP), Italy’s second-biggest bank, posted a fourth-quarter net loss because of a 10.2 billion-euro ($13.3 billion) writedown of goodwill related to mergers and acquisitions.
The net loss was 10.1 billion euros, compared with net income of 505 million euros a year earlier. Excluding one-time items, the quarterly profit was 265 million euros, the Milan- based lender said in a statement. Analysts expected profit of 633 million euros, according to the average of 10 estimates compiled by Bloomberg. The bank cut its dividend by 3 cents to 5 cents per share.
“The 2011 dividend is a floor for the bank,” Chief Executive Officer Enrico Tommaso Cucchiani said in a conference call with analysts. “Shareholders have to be rewarded, and a bank shouldn’t retain capital unless there is a better utilization.”
Intesa joined UniCredit SpA, the country’s biggest bank by assets, in reducing the value of intangible assets related to acquisitions made more than five years ago. The lender’s purchases included a 29.6 billion-euro takeover of Sanpaolo IMI, merged into Banca Intesa in 2007.
The results “look good in terms of total income and pre- provision profit,” Carlo Tommaselli, an analyst at Societe Generale SA in Milan, wrote in a note to clients. Intesa rose 4 percent to 1.56 euros in Milan trading, giving the bank a market value of 25.4 billion euros.
Revenue rose to 4.3 billion euros in the quarter from 4.2 billion euros a year earlier, while net interest income increased 5.8 percent to 2.5 billion euros, benefiting from funding borrowed from the European Central Bank’s longer-term refinancing operations, or LTROs.
Intesa’s core Tier 1 ratio, a key measure of financial health, was 10.1 percent at the end of the year, confirming it as one of the best capitalized lenders in the country. Loan-loss provisions more than doubled to 2 billion euros in the quarter.
Cucchiani, named as chief executive officer in November to replace Corrado Passera, is working on a business plan review to take into account negative market development and recession in Italy. Intesa is shedding jobs and reducing costs to strengthen finances as part of its five-year business plan.
“Intesa’s operating performance, net of 2011 non-recurring items, is expected to remain broadly stable,” the bank said in the statement. In the first quarter of the year operating profit may record a double-digit growth, Cucchiani said.
The bank recorded a tax benefit of about 1 billion euros in the fourth quarter due to the realignment of intangible assets. One-off items also include 400 million euros of writedowns on Greek bonds and 120 million euros on its stake in Telco SpA.
Intesa’s savings shares climbed 9 percent to 1.35 euros, after Cucchiani indicated the bank might consider a buyback or conversion. ‘Savings shares are not an efficient source of capital,” he said. Intesa “will see what it can do” about the class of shares, he said without elaborating.
The lender is focusing on organic growth and it won’t participate in an eventual consolidation of the Italian banking industry, he said. Cucchiani ruled out a listing or extraordinary transaction for its fund-management unit Banca Fideuram SpA.
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