Intesa Sanpaolo (MIL:ISP), an Italian retail and commercial bank, was the top contributor to performance for the quarter, returning 20%. Intesa released third-quarter results that showed a stabilized net interest income (NII) and a spread environment that more than offset volume declines. Costs are down 7% year-to-date, driven by head-count reductions of nearly 7,000 since 2011. Management closed nearly 900 branches since 2011 and plans to close another 400 by the end of 2014. We expect additional branch closures will lower costs further, but we don’t expect that cost reductions will continue at current rates. Capital ratios and liquidity remain strong, and management plans to continue its high dividend payout, assuming there are no regulatory constraints.
From David Herro (Trades, Portfolio)’s fourth quarter 2013 commentary.
