UCG Unicredit Spa

   By Pietro Lombardi 
 

UniCredit SpA (UCG.MI) said Thursday that first-quarter net profit increased by double digits, a result that Chief Executive Jean Pierre Mustier deemed the bank's "best first quarter in more than a decade."

The Italian bank's net profit rose almost 23% from a year earlier to 1.11 billion euros ($1.32 billion), helped by lower operating costs and net write downs on loans and provisions.

Jefferies said in a note that UniCredit's first-quarter results are "another tick in the box on the restructuring story." The U.S. bank points to better-than-expected net interest income, fees, costs and provision trends combining with stronger capital generation being redeployed to accelerate the rundown of nonperforming loans. Jefferies adds that it expects the stock to outperform on Thursday.

At 0751 GMT shares traded 2.7% higher, while Italy's FTSE MIB was up 0.2%.

The result is ahead of analysts' expectations, which, according to a consensus forecast provided by the bank and based on 25 estimates, stood at EUR766 million.

Operating income was roughly flat at EUR5.11 billion compared with EUR5.15 billion a year earlier.

Fees and commissions rose 2.8% year-on-year to EUR1.75 billion, lifted by investment and transactional fees. Net interest income slipped 0.9% to EUR2.64 billion, it said.

Operating costs fell 5.2% to EUR2.74 billion, the company said.

UniCredit said net write-downs on loans and provisions in the period stood at EUR496 million compared with EUR766 million a year earlier.

The bank confirmed the targets of its "Transform 2019" plan, and it is accelerating the reduction of its nonperforming exposures. It now targets gross NPEs of EUR37.9 billion for the group in 2019, compared with a previous expectation of EUR40.3 billion.

"The group should benefit from the ongoing recovery in the economic cycle during 2018, despite the extraordinarily low interest rates and the still high level of liquidity, consequently affecting the net interest income dynamics," the bank said.

UniCredit said it expects fee growth and cost reduction to be key drivers of its performance this year.

UniCredit anticipates bringing forward the rundown of the non core portfolio to 2021 from 2025.

"At the start of its second year, Transform 2019 is ahead of schedule and yielding tangible results," Mr. Mustier said.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

May 10, 2018 04:11 ET (08:11 GMT)

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