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Unione di Banche Italiane SpA, Italy’s fifth-largest bank, plans to pay out 40% of net income to shareholders on average over the course of its three-year strategic plan and may make an extra payment if capital is strong enough.
The bank sees net income more than doubling by 2022 and it plans to cut provisions for bad loans and invest in digital technology, UBI Banca said in a statement on Monday. It will also focus on strengthening higher-margin businesses such as private and corporate banking.
Chief Executive Officer Victor Massiah has relied on curbing risk and cutting costs to boost profit as sluggish Italian economic growth and prolonged low interest rates hamper core revenue. UBI expects to sell off a package of bad loans valued at about 800 million euros ($867 million) during 2020 and that will be its last large-scale disposal of soured debt.
UBI was up 4.3% in Milan trading at 3.45 euros as of 12:33 p.m. That’s the highest value since October 2018.
Highlights From the Plan
- Net income of EU665m in 2022 vs EU251 million in 2019
- CET1 ratio at 12.5%
- Return on tangible equity 8.3% in 2022
- Says dividend may increase if CET1 above 12.5% in 2022
- Loan-loss impairments seen down to EU387m in 2022 from EU738m in 2019