Intesa Sanpaolo, Italy’s biggest bank, said on Friday it would pay its shareholders €22 billion between now and 2025 as part of its new strategic plan.

The bank announced a 27.7 per cent increase in net profit to €4.18 billion in 2021, slightly above expectations, although less than predicted several years ago due to the coronavirus pandemic.

For 2022, Intesa Sanpaolo expects a net profit of more than €5 billion, chief executive Carlo Messina said.

The shareholder payout, in dividends and share buybacks, is equivalent to more than 40 per cent of Intesa Sanpaolo’s market capitalisation and includes €6.6 billion in 2022.

Messina told an analysts’ call that the payout ratio – the proportion of earnings paid to shareholders – of 70 per cent was “one of the highest in the banking sector in Europe and we consider it to be the right level”.

Main rival UniCredit set its own ambitious target in December of paying out at least €16 billion to shareholders by 2024. That same month, the European Banking Authority (EBA) urged banks not to be “overly generous”, even those with “comfortable” liquidity positions, in case the economic outlook worsened.

At the start of the pandemic in early 2020, the European Central Bank asked banks in the eurozone to suspend dividends and share buybacks, but this recommendation was lifted last summer.

At the start of the pandemic in early 2020, the European Central Bank asked banks in the eurozone to suspend dividends and share buybacks, but this recommendation was lifted last summer

As a result, European companies are expected to pay out a total of €410 billion to shareholders this year, a new record after the €378 billion in 2021, according to a report last month from AllianzGI.

Messina insisted the strategic plan took a long-term approach and was “prudent and conservative”.

After a takeover of Ubi Banca in 2020, the chief executive said Intesa Sanpaolo would be cautious on mergers and acquisitions in the years to come.

It expects to increase revenues by 2.3 per cent a year to reach €22.8 billion in 2025, when net profit is expected to reach €6.5 billion.

The bank is planning 9,200 voluntary departures by 2025 – 2,850 already having occurred in 2021 – and 4,600 hires.

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