By Andrea Mandala
MILAN (Reuters) - Italy's fifth-biggest bank UBI Banca aims to nearly double its net profit in the next three years despite near flat revenues by cutting costs and reducing losses from problem loans, it said.
The bank will lay off 2,030 employees, or around 10% of staff, and close 175 branches over the period as part of a push to boost profitability, it said.
Italian banks have been restructuring following a deep recession that turned almost a fifth of overall loans sour by slashing costs and bad debts. Italy's largest bank Unicredit (MI:CRDI) also last week confirmed plans to cut 6,000 jobs in the country over the next four years.
Under a new plan unveiled on Monday, UBI said it would further reduce its share of impaired debt to 5.2% of total lending by the end of 2022, meeting a threshold which has become the new benchmark for lenders across Europe.
As a consequence of the clean-up, writedowns of problem loans will roughly halve to 387 million euros in 2022.
"This is a major contribution to earnings growth under the plan," Chief Executive Victor Massiah told a press conference.
UBI targets a 665 million euro ($721 million) net profit in 2022 compared with a 2019 level of 353 million euros net of one-off charges relating to staff layoffs and other costs.
Like other European banks UBI is battling with negative interest rates, which it expects to drive down its income from lending by 0.9% on average per year over the period to 2022.
Thanks to higher fees however, revenues are seen edging marginally higher under the plan, by 0.3% per year.
UBI said it would pay out 40% of it profits to shareholders over the plan period, and will consider additional dividend payments if its core capital allows it.
The lender said it saw its core capital little changed at 12.5% of assets in 2022 when factoring in the negative impact of regulatory issues and a boost from property disposals.
To curb risk from swings in Italian bond prices, UBI said it would lower the proportion of Italian government bonds in its financial investment portfolio to 37% from 51% at present.