Intesa Sanpaolo shares: Price analysis before buying or selling

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ISIN code: IT0000072618

Ticker: BIT: ISP

Index or market: FTSE MIB

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Elements to consider before selling or buying Intesa Sanpaolo shares

Analysis N°1

The elements that concern the international expansion of this banking group, whose activities remain for the moment too focused on Italy. In particular, we know that this group is betting heavily on its entry into the Abu Dhabi banking market. It goes without saying that if this operation is successful, Intesa Sanpaolo will benefit from an interesting gateway to the Middle East market and will thus be able to gradually extend its positioning to other countries in this geographical area. In the same way, Intesa Sanpaolo could have some opportunities to develop its activities in some specific European countries. This is the case for Turkey, which is part of the group's strategic plan.

Analysis N°2

Still on the subject of future opportunities and development of the Intesa Sanpaolo company, we can note the fact that the asset management industry in Europe is currently experiencing positive prospects. This could of course allow Intesa Sanpaolo to position itself in this sector, which is one of its preferred sectors.

Analysis N°3

The Italian banking market is currently threatened by a contraction in the country's economy. It goes without saying that if the situation persists, one of the first victims will be the Intesa Sanpaolo Group, which is particularly exposed to the national economic situation.

Analysis N°4

Still from an economic point of view, the banking sector is still suffering from the fallout of the debt crisis that hit Europe hard a few years ago. In fact, this crisis has provoked the need for certain measures, including important changes in the regulation of financial institutions, which has a significant impact on the activities of Intesa Sanpaolo.

Analysis N°5

Another threat to the Intesa Sanpaolo group in the years to come is the ever-increasing competition from the other major European banks, which are taking more and more market share and could thus make the expansion of the Italian group in other countries increasingly difficult.

Analysis before buying or selling Intesa Sanpaolo shares

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General presentation of Intesa Sanpaolo

Intesa Sanpaolo is the leading banking group in Italy. Like most of its European competitors, its business is divided into several areas, mainly retail banking, but also investment banking, corporate and market banking, as well as other services such as insurance, mutual fund management and private banking.

Currently, Intesa Sanpaolo manages no less than 340 billion euros of outstanding loans and 370 billion euros of outstanding deposits. Its branches are mainly located in Italy.

Photo credits: ©Baloncici/123RF.COM

The major competitors of Intesa Sanpaolo

Let's now discover the economic environment of Intesa Sanpaolo with a quick presentation of its main competitors on the market and their main activities.

Unicredit Group

First of all, the Italian banking group Unicredit Group is one of the leaders of the banking market in Italy but is also one of the three largest market capitalisations in the euro zone in the sector since 2005. The group owns and operates over 8,954 branches and employs over 148,000 people in Italy.

Banca Monte dei Paschi di Siena

This other company listed on the Bolsa Italiana is not only an Italian bank but also the oldest bank still in operation in the world. It dates back to 1472 and is based in Siena, Tuscany.

UBI Banca

This Italian bank has existed since 2007 and is also known as Unione Banche Italiane. It was formed by the merger of Banche Popolari Unite and Banca Lombarda e Piemontese. Its headquarters are now in Lombardy.

Banco BPM

Another serious competitor of Intesa Sanpaolo is Banco BPM Group which is an Italian banking group of cooperative origin and born from the merger in January 2017 of Banco Popolare and Banca Popolare di Milano. Its headquarters are based in Milan but also in Verona.

Mediobanca

Finally, we will also follow closely the Mediobanca banking group, which is an Italian investment bank specialising in financial advice and asset management. This group is listed on the Milan Stock Exchange and is also present in Paris, London and New York.

The major partners of Intesa Sanpaolo

Let's now take a look at the strategic allies of the Intesa Sanpaolo group with some examples of partnerships that the banking group has been able to set up in the past.

Reyl

The first partnership we will talk about is the one set up with Reyl in 2020. Indeed, according to this project, Intesa Sanpaolo took control of the Geneva-based bank. The majority of the shares of the Reyl group, which then had 239 employees, passed into the hands of the Italian bank. The partners of this establishment, which was created in 1973, remained in place and retained a minority of the capital, namely 30%. Reyl is thus helping Intesa Sanpaolo to develop its private banking business and is taking advantage of the Italian retail bank's network to expand.

Western Union

In 2011, Intesa Sanpaolo signed an agreement with money transfer specialist Western Union to make the company's payment services available on its network. From 2011, the bank's customers were able to transfer money abroad from ATMs and their mobile phones.

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The factors in favour of a rise in the Intesa Sanpaolo share price:

If you are considering starting to buy Intesa Sanpaolo Group shares or trading on the stock's rising price, we would of course recommend that you make sure that the bank is capable of tackling its future and maintaining its profitability. It is by comparing the strengths and weaknesses of this group that you can best anticipate trader interest in this stock and therefore future price trends. Let's start here with a summary of this company's strengths and the arguments that support a bullish trend for this stock.

First of all, the strong presence of this banking group in Italy is of course an undeniable strength. Intesa Sanpaolo operates more than 5,600 branches throughout the country, making it the leader in terms of number of branches. This is a real asset for the banking group, which thus benefits from high visibility in the eyes of the general public.
The strengths of the Intesa Sanpaolo banking group also include the quality and variety of its offer. The bank offers a wide range of banking products and financial services for individuals and companies under a single brand name. This of course allows it to retain its customers by meeting all their needs.
Although Intesa Sanpaolo is very present in Italy, it is also present elsewhere. Indeed, this banking group has been able to develop its offer throughout Europe and also in the rest of the world, particularly in Eastern Europe and North Africa, which considerably reduces its exposure to the national risk of economic crisis. In total, the Intesa Sanpaolo banking group has more than 1,700 branches worldwide and employs no less than 100,000 people in all the countries in which it operates.
Another strong point of the Intesa Sanpaolo Group is the credit sector in Italy. The bank is currently the leader in this category of financial services, with a national market share of 15.3%.
Finally, shareholders and investors in the stock market are also attracted to the shares of this bank because of the fact that it was created as a result of the merger of two major Italian banking groups, namely Banca Intesa and Sanpaolo Bank IMI. This of course gives it a certain strength and more experience than some of its direct competitors.

The factors in favour of a drop in the Intesa Sanpaolo share price:

After reading the various strengths of the Intesa Sanpaolo Group that we have just mentioned, you may want to take a buy position on this stock right now. However, before embarking on such a strategy, we suggest that you also take note of the possible weaknesses of this banking group. Indeed, the few weaknesses that we are now going to reveal to you are likely to have a negative influence on the evolution of its share price and should therefore be the object of your full attention.

First of all, and among the biggest flaws of this Italian banking group, we can note that if Intesa Sanpaolo is present in Europe, it remains a minor bank on this market. Indeed, despite many efforts to make a name for itself in the main European countries, its presence on this market remains relatively weak compared to the large European banks and in particular to the French and German banks which always occupy the front of the scene and hold most of the market shares in this sector. The same is true of the group's presence in the rest of the world.
Finally, the second main weakness of the Intesa Sanpaolo banking group concerns the distribution of its income. Indeed, if, as we have seen above among the advantages of this bank, it offers its customers a wide range of financial services, we can also notice by observing its annual results that the largest part of its turnover still comes from retail banking activities and from a target group of private individuals. Moreover, the bulk of this turnover is also generated in Italy alone. It goes without saying that in the event of an economic depression affecting Italian households, Intesa Sanpaolo's income would fall drastically, which would of course have a direct impact on its share price.

As we have just seen, Intesa Sanpaolo shows only two main weaknesses while its qualities seem more numerous. However, you must take this into account in your analysis and before implementing any strategy because these few drawbacks can have a significant impact on the way this stock is perceived by investors and thus have a major influence on its stock price in the long term.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

Which subsidiaries belong to the Intesa Sanpaolo Group?

The Intesa Sanpaolo banking group owns and operates a number of subsidiaries that enable it to respond to market demand and to position itself in different product and service segments. These subsidiaries include Banca IMI, Banca Apulia, Cassa di Risparmio, Carisap, Banca Nuova, Cassa del Risparmio del Veneto and Banca Fideuram. The group also frequently acquires new subsidiaries.

What do I know about Intesa Sanpaolo's acquisition of UBI Banca?

In February 2020, the Intesa Sanpaolo group announced the forthcoming acquisition of a rival bank. It is indeed the UBI Banca bank also active in Italy. The amount of this transaction should reach 4.9 billion euros. The agreement between the two banks also provides for the sale of 400 to 500 branches of the UBI Banca group to BPER Banca in order to meet the requirements of competition law.

What is Intesa Sanpaolo's dividend policy in 2020?

In March 2020, Intesa Sanpaolo decided to suspend the distribution of €3.4 billion to its shareholders, i.e. a dividend of 19.2 cents per share, and adopted a resolution to propose the allocation to reserves of the net income for the 2019 financial year in accordance with the ECB's recommendations on the post-Covid-19 dividend payment policy.

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Analysis before buying or selling Intesa Sanpaolo shares