UniCredit Swung to 1Q Loss as It Braces for Loan Losses

   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 [e-mail]

(END) Dow Jones Newswires

May 06, 2020 01:45 ET (05:45 GMT)

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