UniCredit S.p.A. (UNCFF) Friday reported a near 67 percent plunge in profit for the second quarter as the Italian banking giant incurred higher loan-loss provisions and posted lower revenues amid falling commercial loan demand and interest rate pressures.
UniCredit said results came amid tough economic conditions and to mitigate unfavorable trends in revenues and loan-loss provisions, it is actively implementing cost cutting measures.
UniCredit reported second quarter net income of 169 million euros, compared to 511 million euros last year.
Revenues for the quarter declined 3.2 percent to 6.25 billion euros from 6.45 billion euros last year.
Net interest income for the quarter slid 5.4 percent from last year to 3.7 billion euros, and fees and commissions fell 4.7 percent to 1.95 billion euros.
Net write-downs on loans and provisions for the quarter escalated 62 percent from last year to 1.9 billion euros.
Additionally, UniCredit said it has settled pending tax disputes related to certain finance transactions, including those referred to as "Project Brontos." The settlement results in aggregate costs of 264.4 million euros which will be covered by provisions in previous periods, it said.
UniCredit was among 13 banks that had their credit ratings cut by Moody's Investors Service last month, reflecting the bank's exposure to sovereign debt. The bank was lowered two notches to Baa2. As at June 30th, UniCredit held around 90 billion euros of sovereign bonds, including 41 billion euros in Italian Sovereign bonds.
As at June 30, 2012, UniCredit's core Tier 1 capital ratio increased to 10.4 percent from 10.3 percent in the prior quarter.
UniCredit had assets totaling 955 billion euros at the end of the quarter, up 3.9 percent from last year. Customer loans totaled 556.8 billion euros, down 0.9 percent from last year. Net impaired loans were 43.7 billion euros, up 14.4 percent. Deposits from customers and debt securities in issue was lower by 0.9 percent at 580.4 billion euros.
In Milan, shares of UniCredit closed at 2.79, up 8.39%, on a volume of about 111 million shares.
UNCFF closed Thursday at $3.40.
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