EQUITY RESEARCH: INTESA SANPAOLO SPA

This equity research report follows the CFA Institute’s recommended format, analysing Intesa Sanpaolo’s financial performance from 2020 to 2023, with a reference date of August 31, 2024. Intesa Sanpaolo was selected due to its pivotal role in the European banking sector and its strong ESG commitments, which are increasingly critical for investors. It has a strong presence both in Italy and internationally. The report utilizes the Discounted Cash Flow (DCF), Dividend Discount Model (DDM) and Multiples methods to value the bank, resulting in a price target of €5.1 per share. This target aligns closely with market expectations, leading to a "BUY" recommendation. The analysis highlights significant improvements between 2020 and 2023 in key financial metrics; Return on Asset increased from 0.21% to 0.80%, Return on Equity rose from 3.25% to 12.08%, and the Net Profit Margin improved from 2.90% to 7.61%. These gains reflect effective management and strategic initiatives. Despite strong financial health, there are risks to the price target, including potential macroeconomic instability and regulatory changes impacting the banking sector. However, Intesa Sanpaolo’s robust commitment to ESG principles, including net-zero emissions by 2030, enhances its long-term investment appeal. This report ultimately presents Intesa Sanpaolo as a financially sound and strategically progressive institution, well-positioned for sustained growth, with a balanced risk profile.