Monte dei Paschi strategic plan foresees €562M loss in 2021, profit in 2022

Italy-based Banca Monte dei Paschi di Siena SpA expects to make a net loss of €562 million in financial year 2021, according to its group strategic plan for 2021 to 2025.

The bank expects to return to profitability, in its baseline scenario, in financial year 2022 and make a net profit of €559 million in financial year 2025, subject to a capital strengthening of €2 billion.

The fully loaded common equity Tier 1 ratio is expected to improve to 13.8% in 2025, from 10.9% in 2021.

In an adverse scenario, the bank expects to return to profitability in financial year 2023.

Monte dei Paschi lowered the interest rate on deposits for corporate customers, for current as well as short-term accounts, to 0 basis points. The move is expected to create liquidity outflows of €3 billion in the next three years.

It will reduce loans to its non-core customers, which include large corporate, key clients and institutions, to €5.5 billion in 2025 from €10.6 billion in 2020.

The bank intends to increase its market share in family business loans to 8.6% in 2025 from 6.8% in 2020.

Additionally, the bank plans to increase its assets under management, which include wealth management and bancassurance, to €77.4 billion in 2025 from €60.2 billion in 2021.

It expects to reduce the number of branches to 1,320 in 2025 from 1,420 in 2020 and make net redundancies of 2,669 by 2025, out of which 880 will be from the streamlining of its headquarters.

The bank said the plan was made in accordance with the Italian government's commitment to dispose of its stake in the lender by 2021.

The state had acquired a 68% stake in Monte dei Paschi in 2017 as part of a €5.4 billion bailout.

The government is currently looking for a partner to merge with the lender.