UniCredit 2Q Net Profit Rises to EUR945 Million -- Update

Italian lender UniCredit SpA (UCG.MI) said second-quarter net profit rose, supported by higher fees and commissions as well as lower provisions for bad loans.

The bank, Italy's largest by assets, said Thursday net profit stood at 945 million euros ($1.1 billion), compared with EUR916 million a year earlier. Last year, lower costs and one-time items, including a EUR216 million capital gain on UniCredit's sale of its stake in Visa Europe, buoyed the figure.

Revenue declined 8% to EUR4.86 billion in the latest period, mainly because of lower trading income, which fell 46% from a year earlier to EUR462 million.

"This quarter benefited from an economic environment which is supportive in Europe," said Chief Executive Jean Pierre Mustier, adding the lender is also starting to reap the benefits of its internal reorganization.

In February, UniCredit completed a EUR13 billion rights issue, one of the biggest transactions of this kind ever launched in Europe and a key plank of the lender's plan to shore up its finances and making it more profitable.

The bank said in December it planned to sell fresh shares, cut thousands of jobs and shed a large chunk of bad loans as part of the overhaul.

After launching the share sale, the bank posted a loss of EUR13.56 billion for the last quarter of 2016, reflecting the clean-up of its balance sheet foreseen in the plan.

Last month, the bank signed a definitive agreement with Pacific Investment Management Co., or Pimco, and Fortress Investment Group for the sale of EUR18 billion worth of bad loans.

For the quarter, the bank set aside EUR564 million to cover for potential losses on loans, down from EUR884 million for the same quarter a year earlier.

The bank said its Common Equity Tier 1 Ratio with fully applied Basel 3 rules--a commonly used measure of capital strength for lenders---stood at 12.8% at the end of June, benefiting from an additional 0.72 percentage points coming from the sale of its Polish unit Bank Pekao which it completed during the quarter.

However, the bank said net profit was lowered by two one-off items: EUR310 million in negative currency effects coming from the sale of Pekao, plus a EUR135 million write-down of the bank's stake in Atlante, a government-orchestrated fund created last year to save ailing banks and buy lenders' bad loans.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

August 03, 2017 02:41 ET (06:41 GMT)