After the unpleasant trend of bad loans, the head of one Italy's biggest bank revealed that it would be best to buy Italian real estate and Europe's bank stocks now.
Due to many non-performing loans, Italian banks have faced a recession but according to chief executive of Intesa Sanpaolo, the fears were merely overstated and that the slump actually represented a "unique buying opportunity."
The shares of one Euro zone's largest banks, Intesa Sanpaolo, is said to have fallen by more than 23 percent in the beginning of the year 2016.
"If you have, like Intesa SanPaolo, 40 billion euros ($44 billion) of gross bad loans, but you have 15 billion euros net — because we posted 25 billion euros of provisions — and you have 30 billion euros of collateral facing the 15 billion euros you are in a situation of having a proxy of zero risk. And then you have all the benefit of the recovery in the real estate market in Italy," Carlo Messina said according to CNBC , adding that the bank will not benefit from Italy's economic recovery.
Recently, Messina revealed that the stock of bad loans from Intesa Sanpaolo has declined. She also suggested that the investors should focus on net instead on the gross of bad loans. The shares of the bank fell at around 1 percent on Monday while several banks cut its target share price which includes Nomura, Barclays and JP Morgan.
On Friday, the fourth-quarter net income of Intesa Sanpaolo was reported to be 13 million euros versus 722 million euros for the third quarter and 48 million euros during the fourth quarter of 2014.
Meanwhile, after a slight shrink of economy in 2014 during the first year of Prime Minister Matteo Renzi, Italy's economic condition grew by 0.8 percent in 2015. According to the European Commission, economic growth will be seen accelerating to 2016.
