Italian bank Intesa SanPaolo reports 36 percent decrease in 1st quarter net income

By Colleen Barry, AP
Friday, May 14, 2010

Intesa SanPaolo Q1 profit down 36 percent

MILAN — Italian bank Intesa SanPaolo on Friday reported a 36 percent drop in first quarter net income, with the reduction reflecting a nonrecurring tax gain last year.

Italy’s second largest bank said in a statement that the profit of euro688 million ($859 million) was down from euro1.1 billion in the same period last year, when it enjoyed a euro511 million gain from the release of deferred taxes.

Excluding nonrecurring items, net income rose 27 percent from euro543 million, the bank said.

Shares in the bank dropped 7.5 percent to euro2.12, with the Milan Stock Market’s main index down 5 percent.

Interest income was euro2.4 billion, down 9.5 percent from euro2.7 billion in the same period last year, while provisions to cover bad loans rose to euro845 million from euro809 million.

The bank also successfully cut costs and saw its net fees and commissions rise.

Intesa SanPaolo said its Core Tier 1 ratio, a sign of a bank’s health, was 7.2 percent, up from 7.1 percent at the end of December. Its Tier One ration was 8.5 percent.

CEO Corrado Passera told analysts that the bank had not yet decided when it will go public with its Fideuram fund management unit, but that it would choose “the best moment.”

Intesa SanPaolo said it holds euro39.5 billion in Italian debt, representing 72 percent of its sovereign debt exposure.

It also has euro800 million in Greek bonds and euro200 million in Irish bonds, nearly 2 percent of its total sovereign debt exposure. Those are among the countries most under pressure by the European debt crisis that has raised the risk of possible defaults on bonds.

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