The sales boost Unicredit's half-year profit: 3,2 billion, an increase of 51%. In the second quarter, profit stood at 1,85 billion, up 81%. Excluding the extraordinary items represented in the first quarter by the sale of properties in Germany and in the second by the sale of 17% of FinecoBank and the Ocean Breeze group, with an impact of 258 and 825 million respectively, the adjusted half-year net income stops at 2,2 billion (+1%), and that quarterly to 1 billion (+0,4%). These are the data approved by the Unicredit board of directors on Tuesday and released before the opening of the Stock Exchange on Wednesday morning.
In the second half, operating costs decreased to 5 billion (-4,5%) and revenues to 9,3 billion, down 3,8% due to lower commissions (-4,6% to 3,1 billion) and the reduction of trading to 0,7 billion (-11%). The extraordinary items represented in the first quarter by the sale of properties in Germany and in the second by the sale of 17% of FinecoBank and the Ocean Breeze group, had an impact of 258 and 825 million respectively.
Looking instead at the second quarter data, adjusted net income was $1 billion, up 0,4% year-over-year and down 8,9% compared to the first quarter of 2019. Operating expenses came in at $2,5 billion, down by 4,6% over the year and 5,2% over the previous quarter. Commissions reach 1,6 billion (-3% on an annual basis). Loan loss provisions are up 41% on the year. Commercial banking Italy and CEE are the divisions that contribute the most to net income.
This is how Jean Pierre Mustier comments on the data presented to the market:
“In the first half of 2019, albeit in a complex macroeconomic context, we were able to once again achieve solid results. We remain confident in Italy's and Europe's fundamentals. UniCredit continues to successfully finance the real economy of the countries in which it operates.
We confirm our year-end targets, including a Group RoTE of above 9 per cent and an adjusted net profit of €4,7 billion, to which the cash dividend payment of 30 per cent will apply. We are ahead of schedule in executing the Transform 2019 plan and we've already achieved our FTE reduction goal and 98 percent branch closures.
In an environment like the current one, with lower interest rates for a longer period than expected, agreed to change our full-year 2019 revenue guidance from €19 billion to €18,7 billion. Non-core gross NPLs have been drastically reduced and will stand close to €2019 billion at the end of 10, well below our initial Transform 2019 target.”
All other year-end targets confirmed: costs at €10,1 billion, cost of risk at 55 basis points, non-core gross non-performing credit exposures for 2019 “well below €14,9 billion and close to €10 billion. ” Adjusted net income is seen at $4,7 billion. The CET1 MDA buffer is confirmed at the end of the year in the upper part of the range between 200-250 basis points.
During the mid-morning conference call with analysts, a question on the redundancies after the leak of news on the possible 10.000 cuts globally (not just Italy) could not be missing. "Any new redundancies in UniCredit staff will be managed in a socially responsible manner" assured Jean Pierre Mustier using the same expression contained in the letter sent last July to group employees to reassure that the exits would be managed through early retirements. Mustier has reiterated several times how, if any, other details will be defined in the "next plan that we will present in December".
(Article updated at 12:51 on Wednesday 7 August 2019)