February 5, 2020 / 7:59 PM / 14 days ago

UPDATE 1-Italy's BPER posts Q4 net loss, hit by bad loan sales, staff cuts

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MILAN, Feb 5 (Reuters) - Italy’s sixth-largest lender, BPER Banca, reported a fourth-quarter net loss on Wednesday, due to one-off charges and further writedowns to dispose of bad loans.

The bank, based in the northern Emilia Romagna region, has been working in recent years to shed bad debts, a clean-up which CEO Alessandro Vandelli has said was needed before it could consider joining an expected round of consolidation among mid-tier banks.

BPER reported a net loss of 143 million euros ($158 million) for the three months through December, compared with a net profit of 44 million euro a year earlier.

It wrote down problem loans by 301 million euros in the second half the year to ease a sale of bad debts planned by mid-2020, which Vandelli told analysts would total at least 1 billion euros.

With the sale, the bank aims to reduce bad loans as a proportion of total lending to below 9% in 2020, a year earlier than originally planned, compared with 11.1% at the end of 2019.

BPER agreed last year to take over small peer Unipol Banca from its top shareholder insurer Unipol in a deal that enabled it to separately shed 1.3 billion euros in bad loans.

Vandelli said that after offloading the worst performing loans the bank was now working on possible sales of so-called ‘unlikely-to-pay’ (UTP) loans which are not yet in default but are unlikely to be recovered in full.

BPER also booked 136 million euros in the second half in costs for staff reductions allowing it to reach its business plan target of 1,300 job cuts.

Buoyant fees and trading income helped revenues, while net interest income - a measure of how much money a bank makes from its core retail business - suffered from negative official interest rates, which make lending unprofitable.

The bank said it would pay a dividend of 0.14 euro cents per share, up from 0.13 euro cents a year earlier.

$1 = 0.9088 euros Reporting by Andrea Mandalà; editing by Mark Potter

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