With more than 6,000 branches and a 20 percent share of its domestic market, Intesa Sanpaolo (Milan: ISP, OTC: ISNPY) is one of Italy’s largest banks. The financial institution also has a small presence in Central and Easter Europe that accounts for about 7 percent of its loan book.
Recent data from Italy suggest that the economy has stabilized after two years of recession. Italy’s manufacturing purchasing managers’ index in July breached 50–the inflection point between expansion and contraction–for the first time in two years and continued to head higher in August.
An improving economy should benefit Italy’s banks, especially institutions that have shored up their balance sheets. During the second quarter of 2013, Intesa Sanpaolo grew its net fees and commissions by 19 percent from year-ago levels–one of the strongest performances in all of Europe. Meanwhile, the company reduced its costs by 10 percent over this 12-month period, thanks to a 5 percent reduction in headcount and lower compensation packages.
Intesa Sanpaolo stands to benefit from resisting the lure of growing market share without regard to cost; with one of the strongest balance sheets in Italy’s financial sector, the bank can focus on growth opportunities instead of getting its house in order.