Italy's Intesa lifts full year profit outlook as it prepares to launch MPS bid

MILAN, Nov 3 (Reuters) - Italy's biggest bank Intesa Sanpaolo ISP.MI on Tuesday posted solid earnings and improved its full-year outlook ahead of launching its buyout offer for rival Monte dei Paschi di Siena BMPS.MI.

Intesa now sees a 2026 net profit "well" above €10 billion ($11 billion), versus an earlier forecast of a full-year result above that figure, despite a €900 million hit on 2026 earnings from Italy's budget law for next year, which has hiked taxes on banks.

Intesa also forecast a "significant" increase in income derived from the gap between lending and deposit rates in 2027.

It said it will pay out 95% of this year's profit to investors, three quarters via cash dividends and 20% in the form of a share buyback.

Net profit in the July-September period totalled €2.65 billion compared with a €2.50 billion average analyst forecast in an LSEG consensus.

With revenue in the quarter matching analyst expectations at €7 billion, Intesa kept a lid on costs which were flat quarter-on-quarter and declined by 2.5% from a year before.

With the bulk of its business in Italy, where an ageing and fast-shrinking population hinders economic growth, Intesa has been targeting cost savings through technology but also domestic acquisitions such as the MPS deal.

After persuading MPS's shareholders to reject the bank's defence strategy with a sweetener and a warning it would walk away, Intesa is awaiting approval early next week from Italy's markets watchdog of its €33-billion share-and-cash bid for the Tuscan lender.

The offer's tender phase is expected to kick off in three weeks.

Intesa said it would give MPS shareholders 1.664 new Intesa shares for each MPS share tendered, revising an earlier exchange ratio of 1.6 to take into account the interim dividend it said it would pay in November.

($1 = 0.8937 euros)