Italian banking giant UniCredit SpA (UNCFF.PK) on Monday reported a 59 percent surge in profit for the first quarter from last year, as lower revenues were more than offset by decline in loan loss provisions and operating costs in addition to growth at the company's Italian operations.
UniCredit noted that group asset quality improved with gross impaired loans declining for the first time since the beginning of the crisis in 2008, due to lower inflows as well as high recoveries and collections. Gross impaired loans declined 1.3 percent from the preceding fourth quarter.
Federico Ghizzoni, CEO of of UniCredit said, "The remarkable results achieved in the first quarter confirm the effectiveness of our strategy and demonstrate that the Group is heading in the right direction. Our target net profit 2014 of around €2 billion is now closer."
UniCredit's net income for the first quarter was 712 million euros or $980.51 million, up from 449 million euros in the year-ago period. The company had recorded a net loss of 14.98 billion euros for the preceding fourth quarter.
However, total revenues for the latest quarter declined 4 percent to 5.58 billion euros from 5.79 billion euros in the year-ago period.
Net interest income for the quarter edged up less than 1 percent from the year-ago period to 3.08 billion euros, reflecting the re-pricing of loans, deposits and term funding amid favorable market conditions.
Meanwhile, net fees and commissions edged down slightly to 1.890 billion euros from 1.892 billion euros in the year-ago quarter. Net trading, hedging and fair value income declined 26 percent from the year-ago period to 472 million euros.
Operating costs for the quarter declined 2 percent from the year-ago period to 3.51 billion euros, reflecting lower staff expenses as well as lower amortization, depreciation and impairment losses.
Loan loss provision for the quarter was 838 million euros, down 29 percent from 1.17 billion euros in the same period last year.
UniCredit's assets under management or AUM were 179 billion euros as at March 31, 2014.
UniCredit noted that its non-core portfolio run-down was progressing well, with gross customers loans at 83.6 billion euros in the first quarter, down from 91.9 billion euros in the year-ago period.
The company's CET 1 ratio was 9.47 percent at the end of the latest quarter, compared to 9.36 percent at the end of December 31, 2013.
Further, UniCredit said that the IPO process of Fineco is on track, with the request for the admission to list and trade on the Mercato Telematico Azionario filed with Borsa Italiana on April 16.
On the Milan Stock Exchange, UniCredit shares are currently trading at 6.49 euros, up 0.26 or 4.18 percent on a volume of 45.32 million shares.
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