February 6, 2018 / 7:14 AM / 2 years ago

Intesa Sanpaolo says to halve soured debts under new plan

MILAN, Feb 6 (Reuters) - Intesa SanPaolo set an ambitious goal to cut bad debts under a new business plan unveiled on Tuesday that targets 6 billion euros ($7.4 billion) in profits in 2021 on rising interest and fee income.

Intesa, which reported a 3.8 billion euro net profit for 2017 net of an extraordinary state contribution, said it would halve its gross impaired debts to 6 percent of total loans in 2021 compared with 11.9 percent at the end of last year.

Yielding to regulatory pressure to cut soured debts faster, Intesa in January started discussing the sale of a portfolio together with a stake in its debt collection unit to Sweden’s Intrum Justitia.

The bank confirmed it would move its debt recovery and real estate businesses into a new company and consider a partnership.

Until now the bank had bet on recovering bad debts internally, shunning sales that burn through capital as they are carried out at a loss.

The bank said it would take advantage of the introduction of the new IFRS9 accounting rule to book 4.1 billion euros in writedowns before taxes, mostly of loans, in the first quarter of 2018.

Intesa, which has led a shift among Italian banks towards fee-earning businesses and last year considered a bid for insurer Assicurazioni Generali, said it wanted to strongly grow its non-life insurance business and would consider partnering with a global player in asset management.

$1 = 0.8077 euros Reporting by Valentina Za; editing by Agnieszka Flak

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