Thursday 24 August 2017

New business plan on way as UniCredit beats forecast

Sonia Sirletti and Poppy Trowbridge

UNICREDIT, Italy's biggest bank, yesterday reported fourth-quarter profits that beat analysts' estimates after a tax gain helped cushion higher provisions for bad loans in Germany and costs to overhaul units.

Net profits fell to €321m from €371m a year earlier, the company said. Analysts had expected income of €209m. The lender proposed an unchanged dividend of 3c a share.

"All in all, results were better than expected," said Carlo Tommaselli, an analyst at Societe Generale. "UniCredit showed better results at operating level, while the bottom line was affected by many one-offs."

Chief executive Federico Ghizzoni, who replaced Alessandro Profumo in September, put in place a new executive structure after a management shakeup and is reviewing the bank's strategy in some markets to increase profitability. He hopes to outline a new business plan by the end of the summer.

"In the first couple of months" of the year "we are moving in the right direction, in line with our expectations", said Mr Ghizzoni. "I'm looking at 2011 with a positive mood."

UniCredit rose 1.1pc in Milan. The shares have gained 12pc this year.

Mr Ghizzoni gave "very clear guidance and disclosure" on the bank's business, Mr Tommaselli said. "We expect an upward revision of the consensus" for 2011 results, he added.

UniCredit's net trading income dropped to €53m in the quarter from more than €150m a year earlier, while net interest income rose 1.4pc to €4.2bn.

Loan-loss provisions dropped to €1.8bn from about €2.1bn a year earlier. The bank said its core Tier 1 ratio, a key measure of financial health, fell to 8.58pc as of December 31 from 8.61pc at the end of September.

UniCredit may consider keeping its Pioneer Global Asset Management unit if it doesn't receive satisfactory offers, Mr Ghizzoni said during an analyst meeting yesterday.

"A final decision will be taken in two to three weeks," the chief executive said, adding that the company was ready to revamp the unit should it not receive offers that matched expectations.

Mr Ghizzoni also said that he would consider a listing of the unit if a partnership wasn't completed, adding that the option wasn't "on the table for now". He ruled out a sale of Pioneer's businesses in the US, as they are considered strategic for the bank.

The Italian lender announced in a separate statement yesterday it approved the partial spinoff of Pioneer Investment Management's private-banking business into UniCredit.

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