Unicredit posts €14bn loss for 2013

Italy’s largest bank Unicredit said yesterday it had suffered a staggering €14bn ($19.4bn) loss last year as it wrote down the value of assets and increased its loan loss provisions.

The bank also unveiled a strategic plan that targets generating over €6bn in annual net profits in four years.

The loss was essentially due to writing down the value of assets by €9.3bn and increasing reserves to cover at risk loans by €7.2bn in the final quarter of last year.

It also took a restructuring charge of €699mn.

Unicredit, which posted a net profit of €865mn in 2012, also announced a plan under which it quickly intends to boost profitability.

“Whilst in 2014 we estimate a net profit around €2bn, we intend to more than triple this to €6.6bn in 2018,” chief executive Federico Ghizzoni was quoted as saying.

The bank also said it intends to distribute about 40% of profits to shareholders.

Ghizzoni said the strategic plan “is based on solid fundamentals, a strong risk culture and an improving macro-economic climate.”

He said this involves investment of €4.5bn to grow revenues and to cut an additional €1.3bn in costs.

The bank said it has made considerable progress in reducing the risk in its business, with its leverage ratio down to assets of 19 times its capital from 32 before the global financial crisis struck.

And it has reduced its funding gap to €29bn from 163bn, while increasing its coverage rate for impaired loans and capital base ratios.