summary and your oppinion ———
Cleaning up after a good night can be painful. But Italy’s UniCredit is at least offering investors an invite to the party they hope is to come.
Italy’s largest bank by assets on Tuesday reported its biggest-ever quarterly loss, getting ahead of the European Central Bank‘s review of bank balance sheets by scrubbing its own clean. UniCredit wrote down [euro]9.3 billion ($12.9 billion) of intangible assets, mostly goodwill, in the fourth quarter.
More important, it added [euro]7.2 billion to loan-loss reserves to reflect regulatory changes. Inadequate reserves have dogged Italy’s banking system. Now, at 52%, UniCredit’s reserve as a percentage of bad loans is well above the Italian average of 38%.
And the moves didn’t dent the bank‘s capital too badly. True, UniCredit’s core Tier 1 capital ratio, once Basel III rules are fully applied, fell to 9.4% from 9.8% at the end of September. But a tax benefit, cuts to its risk-weighted assets and the revaluation of its stake in the Bank of Italy helped mitigate the hit. The bank still thinks it can reach a 10% Tier 1 ratio by 2016 helped by a float of its online bank, Fineco.
UniCredit also struck a confident tone on its growth prospects as the European economy recovers. It aims to triple net profit from a forecast [euro]2 billion this year to [euro]6.6 billion in 2018, expanding its return on tangible equity to 13% from 2% in 2013.
The trick will be to show that is achievable. UniCredit plans to cut costs, saving [euro]1.3 billion. But those savings will partly offset rising salary costs the bank can’t avoid–and it plans to increase investment in growth areas like Central and Eastern Europe and corporate banking.
UniCredit, even after its latest write-downs, trades at about 0.8 times tangible book value, compared with European peers at 1 to 1.7 times, notes Macquarie. With a cleaned-up balance sheet and souped-up growth targets, the Italian bank has taken the first step toward closing that gap.
Credit: Helen Thomas
101papers.com is always working towards customer satisfaction. Our professional academic writers always aim at producing comprehensive papers that possess quality and originality at pocket-friendly prices. Students are assured that all their private information is safe with us.
101papers.com provides a system where students can request for money-back in case they cancel the order or in the rare instances of dissatisfaction. The refund policy adheres to the company’s term and conditions on money-back.Read more
While providing the best professional essay writing services, we guarantee all our students of plagiarism-free papers. All papers produced by our professional academic writers are checked against all web resources and previously completed papers to avoid plagiarism.Read more
In our urge to provide the best professional essay writing services, we guarantee students of free revision policy. The free revision policy is a courtesy service where students can request for unlimited for their completed papers. We always aim at achieving 100% customer satisfaction rates. The free revision policy is one among many of our major advantages.Read more
At 101papers.com, every student is entitled to total security. Our professional academic writers are always committed to protecting all private information of our customers. We do not share any personal information with third parties. Additionally, we provide safe systems for all online transactions.Read more
Working with us is the greatest step towards achieving all your academic goals. We always deliver the best professional essay writing services as promised. We, therefore, expect all students to work cooperatively with us, as we work towards achieving our goal, your satisfaction. This way, all services will be delivered accurately and on time.Read more