Good news from two major Italian banks at the end of the first quarter. Unicredit it closed the period with a net profit of 907 million, more than doubled compared to the 406 million of the same period of 2016 and much higher than the 612 million expected by the consensus of analysts. Revenues increased 3,4% to $4,8 billion, with net interest income down 2,5% to $2,56 billion and net fee and commission income up 4,8% to $1,5 billion. Operating costs fell by 3%, to 2,89 billion, for a cost/income ratio down to 59,7%. Loan loss provisions decreased by 11,8% annually to 670 million, for a cost of risk at 60 basis points. In terms of capital solidity, the Cet1 ratio is 11,45% and the pro forma figure which also includes the sales of Pekao and Pioneer is over 12%. Unicredit underlines that the Transform 2019 plan is proceeding "in line" with forecasts.
Furthermore, UniCredit informs that it has entered into an agreement with MBCredit Solution SpA (a Mediobanca Group company) for the sale of a portfolio relating to residual credit exposures deriving from unsecured terminated Leasing Agreements. The portfolio has a gross book value of approximately €500 million, the impact will be reflected in the UniCredit financial statements for the second quarter 2017. The disposal of the portfolio forms part of UniCredit's current strategy of divestment of non-core assets, aimed at strengthening the Group's risk profile envisaged in the Transform 2019 plan.
As for own Mediobanca, the group closed the first 9 months of the 2016-2017 financial year (closed at the end of March 2017) with a net profit of 614 million euros, up 38,8% compared to the same period of the previous year. Revenues rose 9% to 1.657 million euros, the highest ever, with all components growing. In the period, writedowns on loans fell by 22%, to 248 million euro. The data is better than the consensus, which saw a profit of 560 million, adjustments of 280 million and revenues of 1.630 million. In the third quarter of the year, revenues amounted to 584 million and profits to 196 million, up 58% from the third quarter of the previous year. The bank's CEO, Alberto Nagel, said the institution could now raise the dividend beyond the announced threshold of a 40% payout.
Mediobanca's capital ratios as at 31 March 2017 are "further strengthening and mark their highest levels since 2008", reads the Bank's note. The Cet1 phase-in rose to 13,12% from 12,27% at the end of December 2016 and the Total capital ratio rose to 16,75% from 15,74%. The fully-phased Cet1 increased to 13,35% from 12,82% at the end of December 2016 and the Total Capital Ratio increased to 17,03% from 16,41%. The strengthening is due to self-financing (profit for the period net of the 40% pay-out estimate), and the decline in risk-weighted assets (RWA) from 60 billion in March 2016 to 53,8 billion in December 2016 until to 52,2 billion in March 2017, due to lower volumes of Corporate investment banking and the reduction of market risks.
