After writing off bad debts, Intesa Sanpaolo has posted a surprise full-year net loss of 4.55 billion euros.
Shares of Italy’s biggest high street bank jumped as it said it is now on course to rebuild profits and also offered generous dividends to stockholders.
The massive clean-up of its balance sheet came ahead of the health checks which are due to be carried out on the eurozone’s banks.
It also unveiled a new business plan including cost cutting and the sale of non-core assets.
“The main point is the release of the business plan with very interesting targets and above all a very generous dividend policy,” analysts at Natixis said in a note.
Earlier this month UniCredit, the country’s biggest bank by assets, similarly posted a surprise net loss, of 14 billion euros, due to a sharp increase in provisions for bad loans and writing down the value of intangible assets.
Like UniCredit, Intesa also said on Friday it had set up a separate ‘bad bank’ unit, in Intesa’s case to manage 46 billion euros of problematic loans which it aims to halve by 2017.
In its provisioning it has set aside 7.1 billion euros to cover for bad loans, which have become the number one problem for Italian lenders due to the deep recession in the euro zone’s third largest economy.