Italy’s largest retail bank, Intesa Sanpaolo, will stay focused on maintaining its strong capital and liquidity positions for the next twelve months as it struggles to lift profits, say top executives in interviews with Institutional Investor.

Prospects for any substantial increase in revenues for the next 18 months look slim as lending stagnates.

The bank’s net profits in the first nine months of 2012, revealed on November 13, were 1.69 billion ($2.16 billion), down 12.5 percent compared to the same period in 2011, amid a deepening recession in its home market from which it derives 80 percent of its revenues. The total volume of loans to customers is also falling, standing at 375 billion on September 30, down 1.7 percent compared to a year earlier. Meanwhile the proportion of doubtful loans is increasing, rising to 2.9 percent of the total on September 30 as against 2.4 percent in December. The bank’s provisions were up sharply to 3.3 billion on September 30, an increase of 48 percent compared to a year earlier.

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