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UniCredit beats expectations with rise in profits

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UniCredit beats expectations with rise in profits
Photo: Filippo Monteforte/AFP
09:49 CEST+02:00
Italian bank UniCredit, in the midst of a massive overhaul, said on Thursday that its net profit rose modestly in the second quarter, beating expectations.

While analysts had expected profits to decline to €676 million in the April-June period, instead they rose by 3.3 percent from the second quarter last year to €945 million ($1.1 billion).

UniCredit has undertaken a major restructuring of its business after it was among the worst performers in stress test results published by Europe's EBA banking regulator in July 2016.

"UniCredit's good 2017 second quarter results confirm the early positive impact of Transform 2019 already seen in the first quarter" when the bank earned a net profit of €907 million, chief executive Jean-Pierre Mustier said in a statement.

The restructuring programme dubbed Transform 2019 will have UniCredit 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 in so-called non-performing loans, which are loans deemed unlikely ever to be paid back.

It pushed non-performing loans down by over €2 billion during the quarter to 53.0 billion at the end of June. As a percentage of overall loans, they dropped by four tenths of a point to 11.0 percent.

Revenue fell 7.8 percent from the same quarter last year to €4.85 billion, but was stable from the previous quarter.

"The performance of the bank is very positive and very reassuring," Mustier said later in a conference call.

Unicredit's shares jumped nearly 4.5 percent higher in opening trading, while Milan's FTSE Mib index edged up 0.1 percent.

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