UniCredit to Increase Shareholder Returns From 2019; Adjusts NPE Targets -- Update
December 12 2017 - 4:34AM
Dow Jones News
By Pietro Lombardi and Giovanni Legorano
Italian lender UniCredit SpA (UCG.MI) said Tuesday that it would
increase its shareholder returns from 2019 and announced the full
rundown of its non-core non-performing exposures by 2025.
Italy's largest lender by assets said it would increase its 2019
dividend payout--to be paid in 2020--to 30% from 20%. After that,
the bank may increase the payout ratio to up to 50% when the impact
of the regulatory headwinds are confirmed.
The bank said it now expects to beat its 2019 gross NPEs
reduction target, with gross NPEs now expected to fall by an
additional 4 billion euros ($4.72 billion). The bank now targets
gross NPEs of EUR40.3 billion in 2019, compared with EUR77.8
billion in 2015.
Non-core gross NPEs are expected to decline to EUR17.2 billion
in 2019, it said. The previous target was EUR19.2 billion.
"Today, we are also announcing the self-funded full rundown of
our non core NPEs portfolio by the end of 2025," Chief Executive
Jean Pierre Mustier said.
"UniCredit's Transform 2019 plan is fully on track and is
yielding early positive results underpinned by renewed commercial
dynamics throughout the group," Mr. Mustier added.
Asked whether the bank could consider an acquisition to achieve
additional growth, Mr. Mustier said the bank's plan is to grow
organically until 2019--when its strategic plan is set to be
completed--and beyond.
UniCredit confirmed its key targets for 2019, including a return
on tangible equity--or RoTE--of at least 9% and revenues of EUR20.6
billion. The bank said its revenue mix has changed, with a slight
increase in fees expected to offset a similar decline in net
interest income.
The bank also confirmed it is targeting a fully loaded capital
equity tier 1 ratio--a key measure of capital strength--of at least
12.5% in 2019.
UniCredit is undergoing a strategic overhaul that includes a
EUR13 billion rights issue that was completed in February,
thousands of job cuts and the disposal of billions of euros worth
of bad loans. To this end, the lender announced on Tuesday it had
signed agreements to reduce its position in a EUR16 billion bad
loan portfolio to below 20%, as previously announced. In late
November Unicredit also reached an agreement with Mediobanca SpA's
(MB.MI) MBCredit Solutions and an affiliate of Cerberus Capital
Management LP to sell a portfolio of non-performing loans
consisting of secured and unsecured credits with a gross book value
of about EUR715 million.
Shares in UniCredit gain 0.6% at EUR17.69 in early trading.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
December 12, 2017 04:19 ET (09:19 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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