By Ángela Cruz Gómez, Financial Institutions

The three pillars of Intesa’s plan: to reduce costs, increase revenue and maintain low cost of risk represent strategic continuity. The key actions to achieve the plan’s targets build on existing strengths, particularly wealth management in Italy. This points to low execution risk.

The focus on leveraging digital capabilities for cost management and revenue expansion is fully aligned with our Long-term Sustainability Assessment and is commensurate with the bank’s past investments on this front. We do not believe the plan assumptions are aggressive and the targets are credible, although the objective to reduce cost of risk will depend on domestic economic and credit conditions. We take into account Intesa’s proven track record in over-achieving previous plan targets.

The plan’s objectives imply that Intesa will likely maintain financial fundamentals broadly in line with our current assessments. With an objective to increase net income to above EUR 11.5bn in 2029 compared with EUR 9.3bn in 2025, our metric for the bank’s bottom-line risk adjusted profitability (i.e. Return on Risk-Weighted Assets, RoRWA) should remain strong at about 3.5% at the end of the plan period compared with slightly above 3% at year-end 2025.

However, shareholder distributions objectives remain elevated at 95% of net stated income (including 75% in cash and 20% in share buybacks), limiting the potential for Intesa’s organic capital generation to support improvements in core capital levels.

The management target for CET1 is to remain above 12.5% throughout the period of the business plan. However, capital cushions should remain in line with current levels, as the bank expects to report a CET1 ratio at 13.2% in 2029, the same level reported in 2025. A shift to tighter capital levels from those reported currently is a negative for rating sensitivity in our outlook on Intesa.

The strategic plan’s focus on absolute cost reduction targets a 1.8% reduction vs 2025 reported cost base. This target includes a meaningful EUR 1.6bn in cost savings across the plan horizon to absorb inflationary pressures and the need for about EUR 700mn in costs, mostly related to investments in technology. These amounts are broadly aligned with those targeted in the previous plan, although the absolute cost reduction by 2025 proved elusive.
Also in line with the approach in the 2022-2025 plan, the cost savings targeted for 2029 include EUR 570m stemming from a reduction of 6,100 in headcount (net of 6,300 new hires) mostly through voluntary exits and natural turnover. In addition, the bank estimates it can achieve another EUR 200m in cost savings from leveraging its previous investments in technology.

Well positioned to achieve key actions

We see Intesa as well positioned to achieve key actions on the revenue front by leveraging ongoing projects. These include expanding the isytech (the cloud-based digital banking platform) and Isybank (the new digital bank) across the group, and the launch of isywealth Europe.

We also see the new strategic plan’s key actions crystallising efforts to develop Fideuram Direct, the digital wealth management platform for private banking, and expansion of the platform abroad. While positive, geographic expansion is unlikely to be material enough over the lifetime of the plan to impact our ratings.

Intesa’s strong franchise in its domestic market and well-rounded banking model support its strategic objectives in business growth and income expansion in the corporate, SME and consumer segments.

The objective to keep asset quality stable relative to 2025 levels is in line with our expectations. The bank’s expansion plans do not point to increasing risk appetite, and nor are we factoring in a material deterioration in asset quality, barring a meaningful economic downturn. Intesa’s target to maintain a net NPL ratio below 1% throughout the plan’s horizon encompasses a relatively stable stock of gross NPLs and inflows vs 2025 levels.

The intention to conduct similarly active credit portfolio management actions as in recent years (which included some additional provisioning for de-risking) will be key in achieving this objective. In this context, the cost of risk objective in the 25bp-30bp range, at through-the-cycle lows, looks somewhat ambitious even when considering the bank’s EUR 900m in management overlays (which it intends to maintain).