Italian banking major UniCredit SpA (UNCFF.PK) Friday reported a sharp decline in first-quarter profit, due to lower trading income and net interest income, partly offset by a decrease in loan-loss provisions.
UniCredit CEO Federico Ghizzoni said the company managed to post a profit despite weak economic conditions plaguing Europe and elsewhere. Ghizzoni also said the quarter saw a slow down in credit deterioration.
Under Ghizzoni, UniCredit is reorganizing itself and pruning costs. The company earlier said it plans savings of 1.5 billion euros by 2015.
UniCredit posted quarterly net profit of 449 million euros, compared with 914 million euros last year.
Revenues for the quarter slid 14.5 percent to 6.08 billion euros from 7.10 billion euros in the prior year.
Income from trading fell 49 percent to 650 million euros compared with last year, when it recorded gains from buying back Tier 1 and Tier 2 bonds.
Net interest income slid 11.5 percent to 3.3 billion euros, amid tough economic conditions, weak commercial loan demand in Western Europe and historically low 3-month Euribor rate of 0.21 percent.
Meanwhile, commissions and fees edged up 0.7 percent to 2 billion euros.
Operating costs for the quarter decreased 1.8 percent to 3.76 billion euros, due to lower staff expenses.
Loan-loss provisions totaled 1.23 billion euros, a decrease of 9.3 percent from 1.36 billion euros a year ago, while provisions for risk and charges increased to 110 million euros from 16 million euros.
At the end of the quarter, UniCredit had assets of 912.9 billion euros, down 0.7 percent year-over-year. Loans and receivables fell 2.3 percent to 537.5 billion euros, while deposits from customers were up 1.1 percent at 407.8 billion euros.
Core Tier 1 ratio at the end of the quarter was 11.03 percent, compared with 10.31 percent a year ago.
In Italy, UniCredit's stock is trading at 4.16 euros, up 2.36%, on a volume of about 127 million shares.
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