MILAN: Italy's UBI Banca cut its 2022 profit goal to take into account the fallout of the COVID-19 pandemic, but pledged to increase dividend payments as it strives to fight off a takeover bid by rival Intesa SanPaolo .

The board of UBI Banca met on Friday over the offer Intesa will launch on Monday. Intesa is offering investors 1.7 newly issued shares for each UBI share in an effort to create the euro zone's seventh-largest banking group.

Ahead of its expected rejection of the offer, UBI Banca updated its business plan through 2022, which was originally unveiled on Feb. 17, just hours before Intesa announced its offer and a few days before the coronavirus epidemic hit Italy.

UBI said it now saw its 2022 net profit at 562 million euros, down from the previous 665 million euro estimate.

It raised estimated loan losses over the plan's period by more than 700 million euros against the backdrop of an expected 10.3% contraction in Italy's domestic output this year.

Replicating Intesa's successful business model, UBI said it planned to internalise the insurance business relating to the Aviva Vita joint-venture by purchasing 100% of its capital.

To counter the prospect of Intesa's higher payouts, UBI said it had around 840 million euros in excess capital it may be able to distribute as dividends over the next three years while keeping a CET1 ratio floor of 12.5%.