MILAN (Reuters) - Italy's biggest bank by assets, UniCredit (MI:CRDI), met its full-year profit target but its shares fell on news its core capital weakened slightly and that it will pay a scrip dividend for the second year in a row.
UniCredit said its net profit in the three months to December stood at 170.4 million euros (126 million pounds), compared with an analyst consensus distributed by the bank of 180 million euros. The full-year figure was 2.0 billion euros, right in line with the group's target.
The bank said its core capital ratio, a key measure of financial strength, stood at 10.02 percent, down from 10.4 percent at the end of September and comparing unfavourably with its domestic rival Intesa Sanpaolo's 13.3 percent. Analysts had expected UniCredit to post a ratio of 10.4-10.6 percent.
Three Milan-based traders said that was disappointing as was news that the bank will pay a 12 euro cent scrip dividend, payable in cash upon request. The shares turned lower after the results to shed around 3 percent by 1309 GMT.
"The shares are down due to the headline miss but also the weak fully-loaded CET 1 ratio," said one trader. "The negative capital build is key."
The bank said it had set aside 4.3 billion euros to cover for bad loans in 2014, of which 1.7 billion euros in the fourth quarter alone. Full-year revenue fell 3.5 percent, due mainly to a 40 percent slide in trading income.
($1 = 0.8841 euros)