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March 19, 2010updated 04 Apr 2017 1:11pm

UniCredit net profits drop 58%, but beat analysts’ forecasts

UniCredit, Italys largest bank by market capitalisation, posted a net profit of 1.7bn ($2.3bn) for fiscal 2009, a slump of 58% on the year before, but ahead of analysts forecasts. The group, which has operations in 22 countries across Europe, also recorded a dip in retail profits, with pre-tax profit falling 68.8% to 945m in 2009 compared to the year before (3.02bn). The chief executive of the Milan-based bank, Alessandro Profumo, said a stronger capital 1 ratio and growing customer demand would position the bank in a very strong position to capture market share as soon as lending activity picks up

By Farah Halime

UniCredit – deposits by business unit, FY09 UniCredit, Italy’s largest bank by market capitalisation, posted a net profit of €1.7bn ($2.3bn) for fiscal 2009, a slump of 58% on the year before, but ahead of analysts’ forecasts.

The group, which has operations in 22 countries across Europe, also recorded a dip in retail profits, with pre-tax profit falling 68.8% to €945m in 2009 compared to the year before (€3.02bn).

The chief executive of the Milan-based bank, Alessandro Profumo, said a stronger capital 1 ratio and growing customer demand would position the bank “in a very strong position to capture market share” as soon as lending activity picks up. 

Retail loans fell 6.8% from €180.2bn for 2008 to €167.9bn, but Profumo remained upbeat and said this was still a “significant number” when compared to other European banks.

Retail deposits rose 9.3% to €235.8bn at the end of 2009.  

Core Tier 1 ratio was strengthened from 7.62% at the end of 2009 to 8.47% at the end of February following a €4bn capital increase, after the bank turned down participation in a government-sponsored capital raising initiative.

The bank also said it expected 2010 to be more stable and was looking at a possible purchase of Swedish-headquartered SEB’s German retail network consisting of 170 branches.

A combination of high revenues and significantly lower costs meant the bank was able to improve its cost-income ratio by 6.5%age points, to 55.6% at the end of 2009. 

The group’s fourth quarter results beat expectations with a net profit of €371m, versus €394m in the third quarter. 

Investment bank Keefe, Bruyette and Woods said in a note that the results were boosted by higher-quality net interest income and fees. Although the bank’s exposure to Central and Eastern Europe, seen as a weakness during the crisis, also hit the bank with revenue in the region slipping to €908m from €2.02bn in 2008, it predicts growth in the region in 2010.

The Italian retail division contributed 26% to total group revenues, and posted pre-tax profits of €848m, down 68.2% year-on-year.

PERFORMANCE

UniCredit – fundamentals, 2009

 

2009

2008

% change

Net interest income (€bn)

17.6

19.3

-9.1

Net fees and commissions (€bn)

7.7

9.0

-14.4

Group pre-tax profit (€bn)

1.7

4.02

-58

Group total assets (€bn)

929

1,046

-11.2

Retail pre-tax profit (€m)

945

3,026

-68.8

Retail loans (€bn)

167.9

180.2

-6.8

Retail deposits (€bn)

235.8

215.9

9.3

Cost-income ratio (%)

55.6

62.1

(650) bps

Total branches

9,799

10,251

-4.4

Source: UniCredit

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