MILAN (Reuters) – Italy’s UniCredit on Wednesday posted a larger-than-expected quarterly loss after recording the value of its investment banking business, when Chief Executive Jean Pierre Mustier stepped down.
However, the bank topped its underlying net profit target for the year, which removed the item one-time, and its core capital strengthened further, paving the way for a pledge to distribute 1.1 billion euros to investors via dividends and share buybacks.
UniCredit, which under Mustier has rebuilt its capital reserves and cleaned up its balance sheet, said its best quality capital reached 15.1% of assets in December, up sharply from 14.4% three months earlier and above expectations.
After steering UniCredit through a restructuring since mid-2016, Mustier late last year said he would not stay for the next term, blaming a dispute with the board over strategy.
His successor, former head of UBS investment banking Andrea Orcel, will take over after the annual shareholder meeting in mid-April. Meanwhile, UniCredit has appointed the Co-Chief Operating Officer Ranieri de Marchis as interim general manager.
“Andrea has … an impressive track record in international finance. He is in the right position to take UniCredit at a later stage of his journey, ”Mustier said in a statement.
Orcel’s first challenge is deciding whether to succumb to pressure from the Italian Ministry of Finance to acquire state-owned lender Monte dei Paschi in Siena.
Slightly interested in expanding UniCredit’s domestic footprint despite a wave of consolidation in Italy, Mustier has negotiated stringent terms to consider a deal.
It will fall to Orcel to assess whether Roma sweeteners have lined up to lighten the deal enough to face Monte dei Paschi, who earlier on Wednesday reported a loss of 1.7 billion euros for 2020.
UniCredit posted an underlying net profit of 1.3 billion euros for the year, with costs helping it beat forecast yields above 800 million euros.
It said the 2021 target was above 3 billion euros, compared to a previous estimate of 3.0-3.5 billion.
For the fourth quarter, the bank reported a net loss of 1.18 billion euros, above the firm-provided consensus-provided average estimate of 686 million euros.
The results were influenced by a record 878 million euros in goodwill at UniCredit’s Corporate Banking and Investments Unit.
Unexpectedly releasing its earnings a day early, UniCredit said provisions for loan losses reached 5 billion euros last year, as banks prepare for future pandemic strikes.
In line with restrictions on payments that were imposed until the end of September due to the pandemic, UniCredit said it would pay 268 million euros in cash dividends and buy back shares for 179 million euros.
Another 652 million euro share buyback is scheduled for the fall.
($ 1 = 0.8242 euros)
Reporting by Valentina Za; editing by Elaine Hardcastle and Grant McCool