In the third quarter of 2016, Unicredit's net profit amounted to 447 million, down by 11,8% compared to the same period of the previous year.
This is one of the most important figures in the accounts published today by the Milanese bank, in view of the new business plan scheduled for 13 December. Returning to profit, the result was lower than the expectations of analysts who had expected net profits of 467 million euros.
The total revenues of the group instead they rose by 2,3% to 5,5 billion euros, in this case beating the consensus, equal to 5,2 billion euros. Net interest fell 2,6% to $2,85 billion (2,86 forecast), while net commissions fell 2,3% to $1,86 billion (1,87).
As it regards instead the data relating to the first nine months of the year, profit is in any case growing, as well as revenues. Both data resulted in an increase respectively of 14,7% to 1,77 billion euro and 1,5% to 17,1 billion euro.
On the other hand, net interest decreased (down by 2,7% to 8,6 billion) and net commissions which reached 5,7 billion (-3%). -4,2% for operating costs, settling at 9,8 billion euro, for a cost/income ratio down to 57,5%.
As regards equity, the common equity tier 1 ratio rose to 10,82%.
In the press release issued a few minutes ago, Unicredit highlights that the result for the three months ending in September was achieved thanks to the "positive contribution of all the main divisions". Going into detail, the Central Eastern Europe division, in the quarter, produced a profit of 420 million, with revenues growing by 10,9% annually to one billion, thanks to the results from Turkey (102 million, +63,1% annually), the Czech Republic (55 million, -1,7%) and Bulgaria (53 million, +6,5%).
Corporate and Investment banking (Cib) achieved one billion in revenues (+25,7% annually) and a net profit of 366 million (+17,9%), while Commercial bank Italy recorded a decrease in revenues from the 1,1% per year to 1,8 billion and a profit of 256 million (-29,4%).
At group level, loan loss provisions amounted to one billion euro, essentially stable (+0,3%) on an annual basis. The cost of risk stood at 83 basis points, two points less than in September 2015 but +8 points since June. The ratio of net non-performing loans to total net loans is 7,6% (+0,1 percentage points since June and -0,8 since September 2015), with a coverage ratio of 52,6%.
Net non-performing loans recorded on the balance sheet decreased by 8% on an annual basis at 36,4 billion in the third quarter with a coverage ratio of 52,6%, while non-performing loans remained stable at 19,6 billion with a coverage ratio of 61,9%.
Net non-performing loans amount to 4,1% of net loans, with a coverage ratio of 61,9%. As regards the balance sheet aggregates, total assets fell to 874,5 billion (-1,9% from the second quarter, +0,1% on an annual basis), due to the drop in loans to customers (8,2 billion less than in the second quarter), largely offset by the increase in interbank loans (+7,7 billion), and the reduction in financial investments (-8,3 billion) and financial assets held for trading (- 11 billion).
Total liabilities recorded the drop in customer deposits (-2,1 billion), the increase in interbank deposits (+1,9 billion) and the reduction in securities issued (-4,2 billion) and financial liabilities held for trading (-€11,6 billion).
Finally, based on what was underlined by the group, the 2016 funding plan was executed for around 15,8 billion at the end of October. The institute obtained 8,4 billion in the last TLTRO II auction of the ECB (26,7 billion the total amount from TLTRO II against 18,3 billion from TLTRO I, fully repaid). UniCredit explains that participation in the upcoming Tltro II auctions is being evaluated.
From an occupational point of view, compared to September 2015, Unicredit has 3.849 fewer employees. In the last year, a total of 463 branches were closed, of which 308 in Italy and 155 in other countries.
During the conference call following the presentation of the accounts, l to Jean Pierre Mustier, answering questions from journalists, he announced that "On corporate governance we will have a specific point in the investor day where we will give an explanation of what the evolution of corporate governance in the group will be". Mustier then stressed that he had not received "any pressure from anyone" about the decisions to be made. “I run the bank without any interference from anyone and with a good relationship with the board,” he concluded
In Piazza Affari, after the publication of the accounts, the Unicredit stock continues to rise, rising by 4,30% to 2,326 euros. In addition to the strengthening of capital solidity as well as expectations, investors are pleased by the words of the managing director Jean Pierre Mustier relating to the bank's objectives. The manager, while referring for every detail to the presentation of the new business plan which will take place on December 13, declared that "Unicredit aims to have a reasonable capital buffer on the regulatory minimums". This sentence was interpreted by operators as a signal that the expected capital increase will not be placed in the higher range than expected.
In a subsequent note, Unicredit then confirmed “that it had received offers for Pioneer Investments and to be negotiating with potential buyers", but he also specified that "there is no certainty that these negotiations can lead to any transaction nor certainty regarding the conditions under which such an operation can proceed".
As announced on 11 July, the institute "undertook a deep strategic review at group level - continues the note -, which will cover all the main areas of the bank in order to strengthen and optimize the group's capital endowment, improve its profitability, guarantee continuous evolution of business activities and maintain the flexibility necessary to seize all opportunities to generate value".
The outcome of this review "will be communicated in London during the Capital Markets Day - concludes the note - on 13 December 2016".
