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By Pietro Lombardi
UniCredit SpA (UCG.MI) will cut roughly 8,000 jobs and close about 500 branches through 2023 as it targets gross savings of 1 billion euros ($1.10 billion) in Western Europe, Italy's largest bank said ahead of its capital markets day in London on Tuesday.
The headcount reduction is part of the bank's 2020-23 strategic plan, which targets underlying net profit of EUR5 billion in 2023.
The new plan comes as the bank, like its European peers, faces a challenging environment, with low interest rates, intense competition and regulation weighing on profitability.
The bank, which has retail businesses in several European countries and an investment banking arm, said it would return EUR8 billion to shareholders through 2023, including a share buyback of EUR2 billion.
It targets a return on tangible equity of at least 8% during the plan period, with capital distribution reaching 50% at the end of the plan.
Earnings per share is seen growing 12% a year, while revenue should rise roughly 0.8% a year to EUR19.3 billion in 2023. Costs are expected to decline 0.2% a year and reach EUR10.2 billion when the plan ends.
The bank will book integration costs for Western Europe of EUR1.4 billion in 2019 and 2020. Of this, roughly EUR300 million will be for Germany and Austria in the fourth quarter and EUR1.1 billion for Italy next year.
UniCredit launched the plan it completed this year to tackle a number of issues, including a large pile of bad loans. Under the strategy, it cut costs, disposed of bad loans worth billions of euros and sold assets, including Polish lender Bank Pekao SA and asset manager Pioneer. The lender also raised EUR13 billion of fresh capital.
More recently, it sold its stakes in online lender FinecoBank SpA (FBK.MI) and in Mediobanca SpA (MB.MI). Over the weekend, it reached an agreement to cut its stake in Turkish bank Yapi ve Kredi Bankasi AS (YKBNK.IS) to below 32% from roughly 41%, in a further step aimed at simplifying its shareholding structure and boost its capital.
Write to Pietro Lombardi at email@example.com
(END) Dow Jones Newswires
December 03, 2019 02:17 ET (07:17 GMT)
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