Dear investors,
In the previous speech we analyzed the various aspects of $ISP.MI (Intesa Sanpaolo Group) 's strengths and weaknesses, but today we briefly analyze the 2019 and 2023 annual financial statements. As with the other explanatory posts of the portfolio, it will be a short analysis whose purpose is to show the performance of the asset over the years (I usually take into account 5 years for this short analysis).
As for 2019, President Gros-Pietro's letter refers to a year of difficult and weak economic growth due to the trade war between the United States and China, which eased in 2020, but which was replaced by the Covid-19 pandemic. In addition, it provides the numbers of online transactions, indicating (rightly) that technology is also fundamental for banks, in fact Intesa San Paolo has been investing heavily in it for some time.
In 2023, President Gros-Pietro refers to the global geopolitical tensions that have caused a slowdown in growth in the Eurozone and the persistence of inflation.
I would like to recall that in 2019 the ECB rates were respectively at -0.50% the deposit rate, 0% the rate on the main refinancing operations and 0.25% the rate on the marginal lending facility. In 2023, on the other hand, the deposit facility rate rose from 2.50% to 4%, the rate on the main refinancing operations rose from 3% to 4.50% and the rate on the marginal lending facility from 3.25% to 4.75%.
The change in interest rates over the years has obviously favored banks profit, helping Intesa San Paolo to reach new record heights.
• Cet1 Ratio (Common Equity Tier1)
This ratio is crucial to understanding capital strength. It represents the primary capital (ordinary shares and retained earnings). The minimum requirements are set out in the framework of the Basel III regulations (see the appropriate section below).
2019: 13,9%
2023: 13,7%
Despite the (minimal) decrease, we are still well above the minimum requirements and this represents a strong capital position.
• Tier1
It represents the ratio of CET1 to risk-weighted assets (each asset of the bank has a risk ratio). Also for this ratio, the minimum requirements are included in the Basel III regulatory framework.
2019: 15,3%
2023: 16,3%
The ratio of primary capital to RWA has increased, which is a sign of careful and prudent asset management.
• Leverage Ratio:
It measures how much debt a bank is in relation to equity. Lower values are considered positive, while high values could indicate high debt.
2019: 6,7%
2023: 5,8%
There is also a significant improvement in this crucial metric, among the best compared to other major European banks.
• NPL Ratio
Non-Performing Loans, i.e. non-performing loans that are unlikely to be recovered. The NPL/total loans ratio indicates the quality of the bank's loans.
2019: 7.6% (compared to 8.8% in 2018); net and gross NPLs have decreased by 51% since 2015. A decidedly remarkable result.
2023: Achieved "zero NPL" status from 2022.
The achievement of this goal was part of the strategic plan to 2025, achieved thanks to capital efficiency and credit risk transfer initiatives. A very important and remarkable milestone.
• Deposits and other liabilities:
Deposits are the main source of funds for a bank, used to give prestige and generate interest. Volume and stability of deposits are indicators of customer confidence. Other liabilities, such as securities issued, can also affect solvency.
2019:
• customer payables €331,181 million, up 2.20% from 2018 (€323,900 million);
• payables to banks €103,324 million, down 4.51% compared to 2018 (€107,982 million);
• securities outstanding €84,887, up 3.32% compared to 2018 (€82,060).
2023:
• customer payables €440,449 million, down 3.21% compared to 2022 (€454,595 million);
• payables to banks €93,242 million, down 48.14% compared to 2022 (€138,132 million);
• securities outstanding €108,428 million, up 28.62% compared to 2022 (€77,400 million).
Payables to customers represent the deposits of the same with the bank, while payables to banks represent the debts that the bank owes to other banks. Outstanding securities are bank issues (bonds, certificates of deposit or other debt securities) purchased by investors.
• LCR (Liquidity Coverage Ratio) & NSFR (Net Stable Funding Ratio)
LCR: Measures the bank's ability to cover cash outflows over a 30-day stress period. Introduced by the Basel Committee (Basel III). The requirement indicates that it must not be less than 100%.
Entered into force in 2018.
2023: 168%
NSFR: assesses the bank's ability to maintain a stable funding structure over 12 months. Introduced by the Basel Committee after the 2007-2008 crisis, it represents the ratio between the amount of stable funding available and the amount of compulsory stable funding. Again, the ratio must be above 100% to ensure sufficient resources for 12-month activities.
Entered into force in 2021 with minimum level of 100%.
2023: 121%
Continue in comments...... Show More
• Net interest
They represent the difference between interest income (loans granted to customers) and interest expense (on customer deposits). A fundamental metric for understanding the credit profitability of a bank.
2019: €7,005 mln
2023: €14,646 m
Difference: 52.17%
I think it is necessary to make... Show More
I would like to point out that the Isybank platform, on which Intesa San Paolo is betting a lot (I remember the strong investments in technology), has a business model based on a cost-income ratio of less than 30%, as also stated in the 2023 letter to shareholders from President Gros-Pietro.
The result... Show More
RISK MANAGEMENT
First of all, it is subject to strict European and international banking regulations. The types of risk managed are:
• CREDIT RISK: i.e. the risk that customers will not be able to honour their debt, in whole or in part. This risk is mitigated thanks to advanced scoring systems, diversification... Show More
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Wed Jun 25 2025 04:41:42 GMT+0000 (Coordinated Universal Time)
