UniCredit returns to profit as bad loans fall
By Silvia Aloisi
MILAN (Reuters) - UniCredit (CRDI.MI: Quote) returned to profit in the first quarter of the year and said bad loans had fallen for the first time since 2008 as the Italian economy shows the first signs of recovery.
Italy's biggest bank by assets beat analyst expectations with a net profit of 712 million euros ($979 million), up nearly 60 percent on a year earlier and compared with a consensus forecast of 550 million euros distributed by the bank.
UniCredit had posted a shock 14 billion-euro loss for 2013, the biggest ever for an Italian bank, after sweeping clean its balance sheet in preparation for a sector-wide health check by European regulators. In 2013 alone, the bank booked huge loan writedowns of 13.7 billion euros.
UniCredit's strategy to aggressively write down the value of its soured loans in 2013 appeared to pay off in the first quarter, with bad loans falling for the first time in six years, by 1.3 percent quarter-on-quarter.
Charges against loan defaults - which are in any case seasonally weaker at the beginning of the year - fell 28.5 percent from a year earlier.
And new loans in its Italian home base - where UniCredit earns around 40 percent of its revenues - rose 63 percent from a year earlier after years of tight credit availability and weak loan demand.
"This allows us to look at the future with confidence" CEO Federico Ghizzoni said in a statement.
Italian banks have been struggling to keep a lid on mounting bad debts that have eaten into their capital base as the euro zone's third biggest economy grappled with the worst recession in 70 years. Continued...