The quarterly results push Unicredit up by 3,78%. In the spotlight of the market the net profit which jumped by almost 59% compared to the same period of 2013 reaching 712 million euros and beating analysts' expectations by 550 million. And if we consider only the core bank, i.e. the part of the performing group that has excluded a non-core portfolio in difficulty from the perimeter, profits rise to a good 1 billion euro. At the overall group level, revenues fell to 5,6 billion euros (-3,6% year on year -3,3% quarter/quarter).
"The net profit target of around 2 billion that we have set ourselves for 2014 is closer", commented the CEO Federico Ghizzoni, noting that the results for the quarter allow us to "look to 2014 with confidence and with the awareness of being able support the recovery that is beginning to take shape".
Two signs suggest that perhaps the moment of change has arrived, after a fourth quarter of 2013 marked by a 15 billion euro loss due to a deep clean-up of the balance sheet. The first is that in the first three months of 2014 gross impaired loans decreased for the first time since the beginning of the crisis in 2008 (-1,3% quarter on quarter). At group level, gross non-performing loans amounted to 82,5 billion euro, down to 8,1% of total net loans. Non-performing loans remained stable at 49,2 billion euro with a coverage ratio of 62,9%.
The second is that in the quarter Piazza Cordusio in Italy recorded a strong recovery in new loans to businesses and households for 2,7 billion euros (+14,3% quarter on quarter, +63,2% year on year). New mortgages grew 315 quarter-over-quarter, +153% year-over-year. Finally, there is another aspect that Ghizzoni wanted to underline. Of the billion in profit generated by the core bank, half, or 500 million, comes from the commercial bank in Italy, "showing that business in Italy is profitable".
In particular, the group notes that the profit of Commercial Bank Italy was supported by an improvement in revenues of 8,7% (quarter on quarter) and by the decrease in costs of 0,8% (quarter on quarter). In terms of capital ratios, the Basel 1 CET3 ratio stands at 9,5%. “The asset quality review – said Ghizzoni during the conference call on the results answering the analysts – is a completely new process and therefore every day is a new day. We have a very good relationship with the regulators and to date we have a good level of confidence that the outcome would be positive. I use the conditional because the process is totally new”.
In the meantime, Unicredit has repaid a further five billion euros of Ltro for a total of 10 billion repaid to date. The remaining 16 billion will be repaid gradually by appealing, explains the note on the accounts, "to the wide range of institutional investors and on the money market, preserving the balance between the maturities of the balance sheet items".
Finally, during the conference call, management explained that the listing process for Fineco should be completed by July. In the first quarter FinecoBank recorded net sales of 1,1 billion (+72% quarter on quarter) and a net profit of 37 million (+37% quarter on quarter).
Ghizzoni explained that Fineco is not listed for capital needs but in line with the new strategy of creating value for shareholders. “Many today don't even know that it exists – said Ghizzoni – I am seeing interest among investors for the IPO and I think it will reflect on the value of the entire group”.
