Intesa Sanpaolo's earnings increase

Intesa Sanpaolo CEO Corrado Passera's integration process following the deal to create Italy's largest retail bank was ahead of schedule due to a slight profit.

Photo: Intesa Sanpaolo's earnings increase

"We have successfully gone through the most difficult phase of the merger," Passera told a conference call after second quarter earnings were released. "The integration process is ahead of schedule and the strategic options are becoming the reality."

Passera said the new, enlarged bank, which merged Jan. 1, had become fully functional during the second quarter.

The Milan-based bank posted net profit of 1.36 billion EUR(US$1.88 billion) compared with 1.34 billion EUR in the same period a year earlier.

Passera said the bank was "particularly happy about the trend in net interest income," which rose 11 percent to 2.48 billion EUR(US$3.43 billion) from 2.24 billion EUR a year earlier.

Intesa Sanpaolo, Italy's largest retail bank with more than 5,500 branches and 12 million customers, is reorganizing its operations by cutting jobs, reshaping its asset management operations and expanding its operations in Italy and abroad.

The bank was created from the merger of Italian banks Banca Intesa SpA and Sanpaolo Imi SpA last year in an all-paper deal that created a market giant with a capitalization of 70 billion EUR(US$96.77 billion).

It said it has added 110,000 new customers as it cut costs and reduced the number of retail products from more than 300 to 131 in a process of simplification.

Intesa Sanpaolo also said it had sold 198 more branches as required by the antitrust authority. Passera said it got about US$10 million (7.23 million EUR) a branch - more than foreseen in the business plan. In all, the bank had to sell nearly 750 branches, most going to Credit AGricole SA for 6 billion EUR(US$8.29 billion).

Shares in Intesa Sanpaolo closed up 2 percent at 5.30 EUR(US$7.33) in trading on the Milan stock exchange.

While shares of financial sector companies have been hit by the subprime-related crisis, Passera said in recent weeks that the bank is not exposed to risks from U.S. subprime because it is not directly involved.

On Tuesday the bank said the subprime crisis in the United States had "no material impact" on its results in the first eight months of the year, and said it had investments in securities linked to subprime loans of 33 million EUR(US$45.62 million).

"This has been a difficult summer for our industry," Passera told a conference call. "We are building on the strength of our bank and it is being recognized by our customers and investors."