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Popolare Emilia Romagna Targets EU 315 Million Profit on Costs

Banca Popolare dell’Emilia Romagna Scarl, Italy’s seventh-biggest bank, said profit may rise 47 percent by 2014 on lower costs and efficiency gains.

The cooperative bank has a net income target of 315 million euros ($412 million) in 2014, compared with 215 million euros posted in 2011, the Modena-based company said in a statement yesterday. The bank plans to gain 165 million euros by a reorganization, including merging its four units.

“The new business plan aims to develop a good level of profitability, sustainable over time, while maintaining a strong local presence,” the lender said in the statement.

Chief Executive Officer Luigi Odorici, who replaced Fabrizio Viola in January, is reorganizing the bank to boost earnings. The lender converted 200 million euros of bonds last year and bought back minorities as part of a plan to strengthen capital.

The shares fell 0.6 percent to 6.49 euros at 10:15 a.m., giving the bank a market value of 2.16 billion euros.

Popolare Emilia Romagna’s fourth-quarter profit more than tripled on higher revenue and lower costs, the bank said in a separate statement. Net income increased to 75 million euros from 22 million euros a year earlier. Its core Tier 1 capital rose to 7.8 percent as of Dec. 31 from 6.8 percent at the end of 2010.

The bank will pay a dividend of 3 cents a share cash plus a share for every 70 shares held on May 18, it said.

“Capital ratios and the dividend are positive news,” Christian Carrese, an analyst at Intermonte SIM said in a note today. “Early targets’ indications seem to be conservative on revenue and provisions, aggressive on costs side,” he said.

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