We are presenting our first-half 2022 results in an extraordinarily complex context. The conflict unleashed by Russia in Ukraine has caused a serious international crisis. The economic outlook is marked by a significant increase in inflation – which was already becoming evident at the beginning of the year – along with the consequent increase in social difficulties.
For this reason, we have decided to allocate to all our people in Italy and abroad – except those who hold more senior management positions – an extraordinary contribution of €500, totaling nearly €50 million benefiting 82,000 people in our Group.
We also continue our support to the people of Ukraine, through our €10 million donation to support humanitarian initiatives that was allocated immediately following the outbreak of the conflict. Support for our colleagues at Pravex Bank was made possible by the many people in the Group who launched hosting initiatives in Italy and the countries bordering Ukraine where we are present.
Turning to our business, we delivered excellent results, thanks to the key industrial initiatives of the 2022-2025 Business Plan that are well underway and that will build a strong bank for the next decade.
The context in which we operate – the Italian economy – continues to show signs of resilience thanks to robust fundamentals: the high savings of Italian households and businesses in the face of a high public debt; the strength of our industries, particularly of export-oriented companies that place us at the top globally in terms of the trade balance; and a solid banking sector able to play an important role in mitigating the difficulties of this phase.
We confirm our €6.5 billion net income target for 2025, the 70% dividend payout in each year of the Business Plan, and the additional shareholder remuneration through the share buyback that has already been initiated with the first €1.7 billion tranche. Strong value creation and value distribution continue to be our priority.
Rising interest rates, the bank's ability to carefully and flexibly manage costs, and the massive deleveraging carried out – by which we have reached our lowest-ever stock and ratios of impaired loans – are the driving force for further growth, even in this challenging environment.
Intesa Sanpaolo will deliver best-in-class profitability in 2022: we expect to exceed a €4 billion net income, assuming no further critical changes to energy and commodities supplies; even with the very conservative assumption of ~40% coverage on Russia/Ukraine exposure, we expect a net income well above €3 billion.
The results achieved in the first half of 2022 are further demonstration of Intesa Sanpaolo's ability, even in extremely complex contexts, to generate significant and sustainable profitability through a highly-diversified and resilient business model that benefits all stakeholders.
Excluding provisions related to the Group’s exposure to Russia and Ukraine of €1.1 billion, first-half net income was €3.3 billion, while stated net income was €2.35 billion. We have already accrued €1.6 billion in dividends.
We saw a strong acceleration in net interest income in the second quarter, up 6.9% compared to the first quarter of the year. In the first six months of the year, operating income is up 4.2% compared to the same period last year.
As we continue to invest in the levers of growth, costs decreased further by 2.5% compared to the first half of last year, and our cost/income ratio of 47.5% places us at the top among major European banks.
Startup activities for the new digital bank, Isybank, are proceeding quickly, which will significantly boost our cost savings: following the partnership with market-leader Thought Machine, we are launching a new unit, Isy Tech, for the development of Isybank with 230 specialists. We are vigorously strengthening the Bank's technology know-how.
In the first half of the year, we further improved asset quality by reducing gross impaired loans by €4.1 billion compared to the end of 2021. We thus brought the gross NPL ratio to 1.7% and the net ratio to 1.0% considering the other disposals planned for this year (already subject to provisions in the fourth quarter of 2021) and applying the EBA definition.
Our capital structure remains extremely solid and well above regulatory requirements, with a fully phased in CET1 ratio of 12.5%, including the full €3.4 billion buyback approved by the ECB and €1.65 billion of dividends accrued in the first half of the year, of which a minimum of €1.1 billion is to be paid as interim dividend in November.
Intesa Sanpaolo remains an engine of the country's real and social economies. In the first half of the year, medium- and long-term lending to households and businesses totaled €32.4 billion in Italy (€42.2 billion in total), and we helped 2,100 Italian businesses return to performing status.
We are continuing and strengthening our program to support the needy with a commitment to reach 50 million interventions over the course of the Plan, in addition to the 28 million interventions made since 2019. In the first six months of the year, we provided more than €5 billion of social credit against a target of €25 billion in cumulative flows announced in the Business Plan.
In the first half of the year, we committed €500 million in financing to support one of the largest social housing programs in Italy, with a target of about 7,000 units dedicated to young and elderly people.
We activated our €8 billion circular economy credit facility with more than €2.3 billion in lending already granted. The professional quality of our people has been and remains the key factor in achieving solid, sustainable results for the benefit of all stakeholders: our thanks go to them.