UniCredit Swung to 1Q Loss as It Braces for Loan Losses
May 06 2020 - 2:00AM
Dow Jones News
By Pietro Lombardi
UniCredit SpA said Wednesday that it will tweak its strategic
plan after it swung to a loss in the first quarter as bad-loan
provisions soared and expenses related to the implementation of its
cost-saving plan hit performance.
The Italian bank booked 1.26 billions euros ($1.37 billion) in
provisions for bad loans, up from EUR467 million a year
earlier.
Last month, it said that it would book roughly EUR900 million in
additional provisions in the quarter for soured loans.
The higher provisions, coupled with one-off costs, led to a
EUR2.71 billion net loss. In the same period last year, it posted a
profit of EUR1.18 billion.
The results included a EUR1.3 billion charge related to the
cost-saving plan it presented in December, as well as charges of
EUR1.7 billion related to a transaction involving Turkish bank Yapi
Kredi.
Revenue fell 8.2% to EUR4.38 billion, hit by a 3% decline in net
interest income and a 63% drop in trading revenue. Fees rose
5.2%.
After completing a deep overhaul, under which it cut costs,
disposed of bad loans worth billions of euros and sold assets, the
bank launched in December a new four-year plan, pledging share
buybacks and dividend increases, as well as cuts in jobs and costs.
However, in March it put on hold dividends and buyback proposals it
had planned to present to shareholders after the European Central
Bank asked the region's lenders not to pay dividends or buy back
shares during the coronavirus pandemic.
In light of the conditions brought about by the coronavirus
pandemic, the bank will present an updated plan at a capital market
day at the end of the year or early next year.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
May 06, 2020 01:45 ET (05:45 GMT)
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