UBI Posts Wider Quarterly Loss Than Expected on One-Time Charges

Unione di Banche Italiane SpA, Italy’s fifth-largest bank, swung to a loss in the second quarter on higher bad-loan provisions and restructuring costs.

UBI reported a net loss of 829 million euros ($917 million) compared with a profit of 49 million euros a year earlier, the Bergamo-based bank said in a statement on Friday. The average estimate of seven analysts surveyed by Bloomberg was for a loss of 700 million euros.

Chief Executive Officer Victor Massiah is seeking to improve asset quality, simplify the bank’s structure and shore up earnings amid sluggish economic growth and record-low interest rates. The bank targets profit of more than 870 million euros in 2020 under its new business plan.

The bank set aside 1.05 billion euros for bad loans in the second quarter compared with 199 million euros a year earlier, as part of the bank’s plan to reduce the ratio of net non-performing exposures to tangible equity -- the so-called Texas ratio -- below 100 percent.

Revenue fell 3 percent from a year earlier to 815 million euros, hurt by sluggish economic growth and record-low interest rates. The bank’s fully-loaded capital ratio under Basel III criteria fell to 11 percent as of June 30 from 11.7 percent at the end of March.

UBI said it expects a lower cost of credit in the second half, in line with its business plan.

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