Italy’s biggest bank more than doubled its profit in first quarter

Italian bank UniCredit said on Thursday that its net profit more than doubled in the first quarter as the massive overhaul embarked upon by its new chief executive begins to pay off.

Italy's biggest bank more than doubled its profit in first quarter
CEO of Italian bank UniCredit, Jean-Pierre Mustier. Photo: Andreas Solaro/AFP

UniCredit said in a statement that net profit soared to 907 million euros ($987 million) in the period from January to March from 406 million euros a year earlier.

The figure was also much higher than analysts' forecasts for net profit of around 612 million euros.

The announcement sent UniCredit's shares up more than 4.3 percent on the Milan stock exchange, while the overall market was up a more modest 0.5 percent.

Writedowns and non-recurring items connected with the vast restructuring programme had pushed UniCredit into a massive loss of 13.6 billion euros in the fourth quarter of 2016.

“UniCredit had an encouraging first quarter with all core business lines contributing positively to the group,” said chief executive Jean-Pierre Mustier, a Frenchman who took over the reins of UniCredit last July.

“These results underpin UniCredit's strengths,” Mustier said.

They also illustrated that the restructuring programme was “already actively contributing to our performance.”

UniCredit said that it was sticking to its forecast for its core capital ratio – a key gauge of a bank's ability to withstand a financial crisis – to be “above 12 percent” at the end of the year.

The ratio stood at 11.45 percent at the end of March.

Cutting jobs and bad debt

UniCredit, Italy's biggest bank in terms of assets, was among the worst performers in stress test results published by Europe's EBA banking regulator in July.

In a bid to beef up its capital buffers, it raised 13 billion euros in fresh capital in February in a share issue that was fully taken up by investors.

As part of the restructuring programme unveiled in December, dubbed Transform 2019, UniCredit is planning to axe the equivalent of 14,000 full-time jobs from an overall workforce of 101,000 by the end of 2019.

It also plans to shed 17.7 billion euros in so-called non-performing loans, which are loans deemed as unlikely ever to be paid back.

UniCredit said its gross exposure to non-performing loans declined to 55.3 billion euros at the end of March from 56.3 billion euros at the end of last year.

Late on Wednesday, it announced an agreement to divest a portfolio of 500 million euros in non-performing loans, a deal that is expected to impact the bank's second-quarter results.

UniCredit said its first-quarter revenues amounted to 4.8 billion euros, which represented an increase of 3.4 percent year-on-year and a jump of 11.7 percent over the previous quarter.

Operating costs were down three percent year-on-year.

By Celine Cornu

READ MORE: Here's what you need to know about Italy's banking crisisHere's what you need to know about Italy's banking crisis
Photo: Giuseppe Cacace/AFP

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Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.