UniCredit SpA (UCG) Chief Executive Officer Federico Ghizzoni said he is “confident” Italy’s biggest bank will reach targets for 2015 as it implements its five-year strategic guidelines approved last year.
“We are not derogating from the indications that we have given through the plan, so I expect that the targets in 2015 will be reached, despite that the world is different,” Ghizzoni said in a Sept. 8 interview in Cernobbio, Italy. “We are ahead of them in terms of capital generation, liquidity, funding position and we will be soon ahead in terms of cost control.”
Ghizzoni is reviewing the bank’s strategy to reduce risks and boost profit as part of the five-year plan approved Nov. 14. The Milan-based lender targeted 1.5 billion euros ($1.9 billion) in savings by 2015, focused on western Europe, as it aims to restore profit to 6.5 billion euros by 2015.
“I’m pretty confident that the strategy outlined will be put in place, we need to accelerate in some areas to compensate what we are missing in others” Ghizzoni said. “We have some issues in Italy about costs coming from the pension reform, but this is not impacting the banking costs because we have found other savings to cover this issue,” he said.
UniCredit rose as much as 1.6 percent, and was up 0.7 percent to 3.69 euros at 4:40 p.m. in Milan, giving the company a market value of 21.3 billion euros. The Bloomberg Banks and Financial Services Index, which was up 0.3 percent today, has risen 13 percent this year, compared with UniCredit’s 13 percent decline.
UniCredit, which in November announced plans to cut 6,150 job, about 4 percent of the worldwide total, through 2015, has reduced its workforce by 2,719 jobs in the first half. The lender, which operates in 22 countries, including Germany, Austria and Poland, is shrinking its assets as part of a review process involving businesses in Europe.
“We confirm what we outlined in the plan, and we are on track in deleveraging our portfolio,” said Ghizzoni. “Talking about asset disposals, meaning M&A, I can say we are actively working on that, and as soon as we have something to present to the market, we will do it.”
The bank plans to wind down 48 billion euros of non- strategic assets over the next three years, after it spent more than $60 billion on European takeovers from 2005 to 2008. Purchases included Munich-based HVB AG, Germany’s third-biggest bank, and the largest lenders in Poland and Austria.
UniCredit is not planning to list HVB or Bank Austria, the CEO said in response to a question on whether a listing of these units may make the group more profitable. “We are not discussing these topics, but there is a strong focus in boosting capital and profitability.”
UniCredit’s second-quarter profit fell 67 percent to 169 million euros as provisions for bad loans increased and the company earned less from lending and fees. Loan-loss provisions increased to 1.91 billion euros in the quarter from 1.18 billion euros a year ago.
Ghizzoni is focusing investments on countries with the biggest and most profitable units in the emerging economies of Europe, where UniCredit is the largest lender. He has identified Russia, Poland, Turkey and the Czech Republic as “growth engines.”
“This group has to look to the assets it owns to make a decision,” he said. “We have a number of discussions ongoing, it is not easy in this time to finalize deals.”
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