MILAN: Monte dei Paschi di Siena , expects to return to profit in 2015 for the time in four years and expects to launch a 3 billion euro rights issue this month as Italy's third largest lender shapes up for a merger.
The bank, which has lost 14.6 billion euros ($16.3 billion) since 2011 and emerged as the weakest lender in a Europe-wide review of banks last year, said it was starting to see the first positive signs from a painful restructuring plan.
Monte dei Paschi, the world's oldest bank, beat forecasts in the first three months of the year with a net profit of 72.6 million euros -- its first quarterly profit in three years -- thanks to strong trading income and higher fees.
The Tuscan bank has been selling assets, closing hundreds of branches and cutting 8,000 jobs to boost its finances. It plans to sell 2 billion euros of bad loans this year.
It is aiming to launch the 3-billion euro capital increase, needed to plug a shortfall unveiled by the European checks last year and pay back state aid, on May 25 if the European Central Bank gives its approval soon, as expected.
The ECB has also told Monte dei Paschi to find a buyer soon because it is not strong enough to stand on its own two feet.
"The improvement in the bank's results is a pre-condition to take part in the new round of consolidation. We are ready, we want to take part in it but it is important to be in a better shape," CEO Fabrizio Viola told analysts on Monday.
In its results statement late on Friday, the lender delayed its business plan targets by one year to 2018, saying this was due to persistently weak economic conditions and strict capital requirements imposed on it by the ECB.
Underscoring the challenges the bank still faces, Monte dei Paschi said its bad loans continued to rise in the first quarter -- and were up 2.7 percent from the previous quarter at nearly 24 billion euros, or almost one in five customer loans.
The shares gained 2.4 percent by 1050 GMT on Monday, with analysts saying investors were welcoming the return to the black.
The bank said on Monday it expects to end 2015 with a net profit without giving a figure.
The bank said direct funding was up 4.2 percent, thanks to a 17 percent increase in fixed term deposits.
Current accounts, bwhich had fallen sharply in the previous quarter after the bank failed the European tests, were up 1.8 percent. However, several analysts said even the delayed profitability targets appeared optimistic.
Comments
Comments are closed.