Italian bank UniCredit SpA (UNCFF.PK) reported Thursday a profit for the first quarter that increased 13 percent from last year, reflecting significant gains from subordinated bonds buyback. However, adjusted profit declined primarily as the year-ago results were boosted by exceptionally strong trading results.
Meanwhile, the results were supported by sustained client activity and strong market contribution in a still deteriorating economic environment. It was also boosted by lower provisions and cost controls.
"UniCredit's very successful capital increase has given us a rock-solid balance sheet which allows us to confidently face the current environment. Thanks to this and to other capital strengthening measures such as the subordinated bonds buyback in February, we are ahead of schedule of our 2012 Basel 3 CET 1 target of 9%," CEO Federico Ghizzoni said in a statement.
The Milan, Italy-based bank reported net profit attributable to the group of 914 million euros or $1.18 billion, for the first quarter, up 12.8 percent from 810 million euros in the prior-year quarter.
The results for the latest quarter includes a 477 million euro gain from the buyback of Tier I and Upper Tier II securities.
Excluding items, adjusted net profit for the quarter dropped 45.2 percent to 444 million euros from last year, primarily due to exceptionally strong trading results last year, volatile financial markets and the continuing deterioration across Europe of the macro-economic environment.
For the first quarter, pre-tax profit was 1.88 billion euros, 26.2 percent higher than 1.49 billion euros in the same quarter last year.
Total revenues for the quarter increased 2.5 percent to 7.10 billion euros from 6.93 billion euros in the same quarter last year.
Net interest income, meanwhile, declined 2.4 percent to 3.79 billion euros from 3.88 billion euros in the prior-year quarter, and net fees and commissions fell 5.7 percent to 2.0 billion euros from 2.12 billion euros a year ago. However, net trading, hedging and fair value income surged 64.4 percent to 1.23 billion euros from last year.
Operating costs for the quarter edged down 0.5 percent to 3.8 billion euros from last year, due to tight cost controls by the company.
Loan loss provisions were 1.4 billion euros, down 7.0 percent from 1.5 billion euros a year ago.
The company noted that its strategic plan announced in mid-November 2011 is on track and is being actively implemented across the Group with specific focus on the core four pillars of the plan: solid balance sheet structure, risk control, cost management and business refocusing in particular in Italy.
The Group is now ahead of schedule to achieve its 2012 CET 1 Basel 3 target of 9 percent, the company added.
"Taking into account the very challenging market and economic conditions, UniCredit shows a strong net profit evolution, an improved liquidity position, and good progress of the implementation of strategic plan," Ghizzoni added.
In Thursday's regular trading session in Milan, UniCredit is currently trading at 2.84 euros, up 0.18 euros or 6.69% on a volume of 115.99 million shares.
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by RTT Staff Writer
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