MILAN (Reuters) -Italy’s biggest bank Intesa Sanpaolo on Thursday improved next year’s profit forecast after reporting stronger than expected earnings for the third quarter, helped by a 10% yearly rise in net fees.
After higher interest rates turbocharged profits in recent quarters, Italian banks are working to boost fee income to offset the waning contribution from rates as the European Central Bank cuts the cost of borrowing.
However, Intesa said it would earn more than anticipated from the gap between lending and deposit rates this year, adding net interest income (NII) would also hold up well next year.
Intesa, whose business model is geared towards wealth management and insurance services which it runs in house, said its successful rate hedging strategy and higher loan volumes would sustain the NII in 2025, while net fees would keep growing.
It guided for a net profit of around 9 billion euros in 2025, improving its previous estimate of a result that would match its 2024 goal of more than 8.5 billion euros.
Intesa last week stuck to the 2024 profit forecast after saying it would book significant one-off costs in the final quarter of the year to fund voluntary staff exits.
In the three months through September, net profit totalled 2.4 billion euros ($2.6 billion), above a 2.3 billion euro LSEG average analyst forecast.
Shares in Intesa, the first Italian bank to report third-quarter earnings, slightly extended gains after the release to stand 0.8% higher by 1220 GMT.
Shares in Intesa have gained 50% so far this year, occasionally pushing its market value past the 70 billion euro threshold and above that of European leader BNP Paribas, which is down 0.8% year-to-date, based on LSEG data.
($1 = 0.9201 euros)
(Reporting by Valentina ZaEditing by Keith Weir)
