MILAN (Reuters) - UniCredit (CRDI.MI) posted a shock 14 billion-euro ($19 billion) loss for 2013 after huge writedowns on acquisitions and bad loans, as it moved to clean up its balance sheet ahead of a sector-wide health check by European regulators.
Italy’s biggest bank by assets said on Tuesday full-year provisions against losses from loans totaled 13.7 billion euros, with 9.3 billion euros in the fourth quarter alone.
UniCredit’s results showed the most dramatic balance sheet tidy-up so far in the euro zone ahead of European Central Bank’s tests of banks’ soundness.
“This is a jaw-dropping clean up,” said a banking analyst who declined to be named. “The company is taking 9.3 billion euros of loan losses. We had (forecast) 4.5 billion euros and thought we were high.”
Goodwill impairments stood at 9 billion euros as the bank sharply wrote down the value of its acquisitions since 2005.
In 2005, UniCredit became a major force in Europe through the purchase of Germany’s HypoVereinsbank and its extensive operations in Central and Eastern Europe.
The massive net loss takes into account a 1.2 billion euros net capital gain from the revaluation of UniCredit’s stake in the Bank of Italy, whose accounting is still under discussion.
The result compared with analysts’ consensus forecast for a 916.5 million euros net profit in 2013, according to a Thomson Reuters poll.
Yet UniCredit shares rallied after an initial drop, as the bank said it did not need to carry out a capital increase but was planning instead to list its Fineco online banking unit and to sell its bad loans management unit.
By 1408 GMT (9:08 ET), UniCredit stock was up 3.2 percent.
UniCredit, which unveiled its 2013-2018 business plan along with the results, said it was targeting a return on tangible equity (ROTE) of 13 percent and a dividend payout of 40 percent.
Its board proposed a scrip dividend of 0.10 euros per share.
The bank said that after the clean-up, it had the highest impaired loan coverage ratio of the whole Italian banking system and one of the best in Europe.
UniCredit also said its fully-loaded Basel III Common Equity Tier 1 ratio, a measure of capital strength, stood at 9.4 percent at the end of 2013.
($1 = 0.7205 euros)
Additional reporting by Stephen Jewkes; Writing by Lisa Jucca; Editing by Mark Potter