UniCredit to Increase Shareholder Returns From 2019; Adjusts NPE Targets -- Update

By Pietro Lombardi and Giovanni LegoranoFeaturesDow Jones Newswires

Italian lender UniCredit SpA (UCG.MI) said Tuesday that it would increase its shareholder returns from 2019 and announced the full rundown of its non-core non-performing exposures by 2025.

Italy's largest lender by assets said it would increase its 2019 dividend payout--to be paid in 2020--to 30% from 20%. After that, the bank may increase the payout ratio to up to 50% when the impact of the regulatory headwinds are confirmed.

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The bank said it now expects to beat its 2019 gross NPEs reduction target, with gross NPEs now expected to fall by an additional 4 billion euros ($4.72 billion). The bank now targets gross NPEs of EUR40.3 billion in 2019, compared with EUR77.8 billion in 2015.

Non-core gross NPEs are expected to decline to EUR17.2 billion in 2019, it said. The previous target was EUR19.2 billion.

"Today, we are also announcing the self-funded full rundown of our non core NPEs portfolio by the end of 2025," Chief Executive Jean Pierre Mustier said.

"UniCredit's Transform 2019 plan is fully on track and is yielding early positive results underpinned by renewed commercial dynamics throughout the group," Mr. Mustier added.

Asked whether the bank could consider an acquisition to achieve additional growth, Mr. Mustier said the bank's plan is to grow organically until 2019--when its strategic plan is set to be completed--and beyond.

UniCredit confirmed its key targets for 2019, including a return on tangible equity--or RoTE--of at least 9% and revenues of EUR20.6 billion. The bank said its revenue mix has changed, with a slight increase in fees expected to offset a similar decline in net interest income.

The bank also confirmed it is targeting a fully loaded capital equity tier 1 ratio--a key measure of capital strength--of at least 12.5% in 2019.

UniCredit is undergoing a strategic overhaul that includes a EUR13 billion rights issue that was completed in February, thousands of job cuts and the disposal of billions of euros worth of bad loans. To this end, the lender announced on Tuesday it had signed agreements to reduce its position in a EUR16 billion bad loan portfolio to below 20%, as previously announced. In late November Unicredit also reached an agreement with Mediobanca SpA's (MB.MI) MBCredit Solutions and an affiliate of Cerberus Capital Management LP to sell a portfolio of non-performing loans consisting of secured and unsecured credits with a gross book value of about EUR715 million.

Shares in UniCredit gain 0.6% at EUR17.69 in early trading.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

December 12, 2017 04:19 ET (09:19 GMT)