Italy's UniCredit bank posts massive $14.5 billion loss

AP News
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Posted: Feb 09, 2017 11:04 AM

MILAN (AP) — Italian bank UniCredit announced a heavy fourth-quarter loss Thursday of 13.6 billion euros ($14.5 billion) as its new CEO moved to fortify the firm by cleaning up its portfolio of soured loans.

Italy's largest bank by assets, UniCredit said that it incurred 13.2 billion euros in one-off expenses, which included a previously announced 8.1-billion-euro write-off on bad loans plus other charges such as contributions to an Italian fund to save weaker banks.

CEO Jean Pierre Mustier called 2016 "a pivotal year" for the bank.

"We took a number of decisive actions regarding legacy and operational issues to ensure the future success of the group," he said, citing progress on the reorganization plan announced in December, including deals this month with unions to slash 14,000 positions by 2019.

The loss was in line with analyst forecasts of 13.56 billion euros, as surveyed by data provider FactSet. It compares with a profit of 153 million euros in the same period last year.

The bank said that without the one-offs, the loss would have totaled 352 million euros, citing lower revenues, which were down 10.6 percent to 4.2 billion euros as fees and interest income fell.

Shares were trading flat at 10.98 euros as investors focused on an ongoing 13 billion euro share sale, which the bank said would close before March 10.

UniCredit said full-year losses totaled 11.8 billion euros, exceeding forecasts of 12.40 euros.

Despite the loss, the bank confirmed its targets for 2019, including net income of 4.7 billion euros and a Core Tier 1 ratio — a gauge of financial health — above 12.5 percent.