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Intesa Second-Quarter Net May Fall on Bad Loans, Lower Revenue

Intesa Sanpaolo SpA, Italy’s second-biggest bank, may say second-quarter profit fell as it set aside more money for bad loans and earned less from trading and fees.

Net income probably declined to 271 million euros ($333 million) from 741 million euros a year earlier, according to the average estimate of 13 analysts surveyed by Bloomberg. The estimates ranged from 217 million euros to 346 million euros, and include a gain of about 105 million euros from the sale of its stake in London Stock Exchange Group Plc.

Results “will continue to show weak fundamentals and the impact of sovereign uncertainty,” Francesca Tondi an analyst at Morgan Stanley, wrote in a July 20 report. The brokerage expects that the quality of assets will continue to deteriorate, while “capital is not a major concern.”

Intesa, the only Italian lender among the top five that hasn’t needed additional capital to comply with European Banking Authority requirements, is eliminating jobs and reducing costs to strengthen finances as part of a five-year business plan. Chief Executive Officer Enrico Tommaso Cucchiani is reviewing the plan because Italy’s third recession in a decade is affecting credit quality and profitability.

Revenue may decline to less than 4 billion euros in the quarter from 4.5 billion euros a year earlier, while loan loss provisions may increase 34 percent in the quarter to 1.1 billion euros, according to the analysts.

The Milan-based bank is scheduled to publish earnings on Aug. 3 and hold a conference call at 2 p.m. the same day. The following is a table of the analysts’ estimates and the year-earlier results. The figures are in millions of euros.

                 Q2 2012      Lowest     Highest       Q2 2011
                  Average     Estimate   Estimate

Net Interest
Income            2,463       2,433         2,511         2,368

Net Commissions 1,311 1,291 1,325 1,410

Net Trading 87 -57 150 541

Revenue 3,986 3,830 4,123 4,515

Operating Profit 1,740 1,623 1,850 2,221 Loan-Loss Provisions -1,102 -1,645 -973 -823 Other Provisions -77 -224 -15 -137

Net Income 271 217 346 741

*in euros

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