Unicredit accelerates on the Stock Exchange after the presentation of the industrial plan which pushes the reorganization of the group to increase efficiency and profit. A plan judged by Ghizzoni, who spoke on a conference call with analysts, "challenging but achievable, and fully focused on our strategy of delivering the maximum possible value to our shareholders". The plan - as Ghizzoni explained - excludes any capital increase ("it would be absurd to ask for it now"). The Stock Exchange also welcomed the third quarter numbers which, despite the 30% drop in profits to 507 million, were better than consensus expectations which stopped at 458 million”. And the prospect of a possible rich dividend, ECB permitting. The fully loaded Cet1 strength ratio will come in before dividend distribution at 12,6% in 2018, above the domestic target of 11,5%. A solid capital base, which the group explains in its industrial plan note, "will allow us a substantial availability for the distribution of dividends, equal to a profit distribution percentage of 40% on average over the period of the plan". “The SREP is not finished yet – Ghizzoni said in a conference call with analysts – and on the dividend front, the ECB will write a letter with recommendations in this regard. We have a large amount of available dividends, we don't expect severe moves from the ECB but we have to wait, so it's not a commitment but an amount available". The stock, which in the afternoon managed to gain more than 3%, was however then deflated at the end.
LESS COSTS, DIGITAL AND A LEANER BANK
The new plan includes five main strategic lines.
Firstly, the reduction of approximately 18.200 employees is expected, also counting the sale of Ukraine and the JV with Pioneer. In particular, the new business plan to 2018 envisages an acceleration of the cost-cutting measures both for personnel and for other operating expenses, which will affect above all the rationalization of the corporate centers more than the network, with the cut of a thousand units senior executives. The cost savings target of the new plan is $1,6 billion to bring the new cost base to $12,9 billion and a cost/income ratio of 50%.
The second pillar of the plan provides for the sale or restructuring of low-profit businesses by the end of 2016.
The third aims to create a simpler and more integrated group with leaner managerial lines, with the Italian business reporting directly to the CEO Federico Ghizzoni.
The fourth strategic line regards the focus on the high-growth business with low capital absorption, including asset management where, Ghizzoni said in a conference call, "we still see room for growth".
Lastly, the fifth pillar is pushing digital with investments of 1,2 billion and the launch, at the beginning of 2017, of the new "buddybank" mobile bank, a bank accessible only from mobile telephones, "with low capital absorption and with a live customer service 24 hours a day, seven days a week”.
THE RECOVERY WILL SUPPORT THE RESULTS OF THE FOURTH QUARTER
The fourth quarter promises to be supported by the economic situation where growth begins to manifest itself with more conviction. "The consolidation of the economic recovery will continue to support the group's results in the last quarter of 2015, together with the group's ongoing commitment to cost containment", Unicredit points out speaking of the prospects for the year. In terms of the macroeconomic scenario, the bank indicates that GDP in Italy is expected to grow by around 1,5% in the second half and that the announcement of an expansion of the asset purchase program is expected on the ECB front and a cut in the deposit rate, albeit small, before the end of the year
In the subsequent press conference illustrating the plan, Ghizzoni also took the opportunity to reiterate that "the Palenzona case is closed".
