Intesa Sanpaolo Posts Huge Loss on Write-Downs Ahead of Stress Tests
News Comes Weeks After Rival UniCredit Reported Massive Loss, Also Weighed by Balance-Sheet Cleanup
Intesa Sanpaolo's results were hit by big write-downs on bad loans and the value of past acquisitions. Bloomberg News MILAN— Intesa Sanpaolo ISP.MI +1.13% SpA posted a massive net loss for the fourth quarter on Friday, hit by huge write-downs on bad loans and on the value of past acquisitions as it cleans up its balance sheet ahead of a euro-zone check of the area's largest lenders.
The bank reported a net loss of €5.19 billion ($7.13 billion) for the three-month period, compared with a net loss of €83 million a year earlier. Analysts had forecast a net loss of €35 million.
The lender proposed a cash dividend of €0.05 a share for 2013—the same as for 2012.
Intesa said it wrote down the value of its bad loans by €3.10 billion in the last quarter—roughly twice to three times the amount it set aside to cover for souring loans in each of the last seven quarters.
The bank also said it wrote down its so-called goodwill, as well as the value of other intangible assets by €5.80 billion.
The last time the bank did so was in the last quarter of 2011, when it posted a net loss of €10.12 billion caused by a goodwill write-off relating to the merger of Banca Intesa and Sanpaolo IMI that created the company and reflected the lower value subsequently put on the combined entity.
Italy's No. 2 bank by assets also published a strategic plan for 2014-17 on Friday. In this plan it said it aims to reach an annual net profit of €4.5 billion in 2017, and set out plans to move toward a more fee-based business model in preparation for a potentially prolonged period of low interest rates.
Earlier in March, UniCredit UCG.MI +0.62% SpA, Italy's largest bank by assets, reported one of the largest losses ever recorded by a European bank, also the result of an aggressive cleanup of its balance sheet ahead of regulators' coming health check.