The Italian bank Intesa SanPaolo reported Tuesday that fourth-quarter net income dropped 7 percent as interest income fell due to lower rates.
Net income in the period ending on Dec. 31 was euro505 million ($704 million), compared with euro543 million in the same period a year earlier.
"We are announcing a set of sound, in our opinion, solid numbers, especially if we consider them in light of the scenario," CEO Corrado Passera told an analyst presentation.
Net interest income quarter fell 3 percent to euro2.42 billion, due to lower interest rates, while fees and commissions were flat at euro1.5 billion. Trading profit fell 5 percent to euro123 million.
Passera said he believed that interest rates will rebound, and that the worst of the crisis has passed.
"We believe we have reached the bottom of the interest rate cycle, and certainly our retail side has paid the cost," Passer said. We believe we have paid the price of the sovereign risk crisis which has hit Europe."
The bank set aside more for risks and charges, euro144 million compared with euro100 million.
It closed the year with a Core Tier 1 ratio, a measure of a bank's health, of 7.9 percent.
Full-year 2010 net income dropped 3.6 percent to euro2.7 billion.
Passera noted that the capital gains the bank expected for the sale of branches to Credit Agricole will be credited in 2011.
Italy's largest retail bank proposed a dividend of euro0.08 cents, in line with last year.
Intesa plans to unveil its new business plan this year that will include recovery in revenues, containment of operating costs and declining cost of credit that will lead to growth in profits.