May 12, 2014 / 12:33 PM / in 4 years

UniCredit swings back to profit, bad loans fall

MILAN (Reuters) - UniCredit (CRDI.MI), Italy’s biggest bank by assets, returned to profit in the first quarter of 2014 thanks to lower loan loss charges after last year’s massive balance-sheet clean up, it said on Monday.

UniCredit Bank headquarters is pictured in Milan March 11, 2014. REUTERS/Alessandro Garofalo

UniCredit, the first top Italian retail bank to give results for the first quarter, said its net profit came in at 712 million euros ($979 million), well above an analyst consensus forecast of 550 million euros. Net profit in the same period of last year stood at 449 million euros.

The bank had posted a shock 14 billion-euro annual loss in 2013, the biggest ever for an Italian lender, after sweeping clean its balance sheet in preparation for a sector-wide health check by European regulators.

That strategy appeared to pay off in the first quarter, with bad loans falling for the first time since 2008, by 1.3 percent quarter-on-quarter.

Loan loss charges - which are in any case seasonally weaker at the beginning of the year - fell 28.5 percent from a year earlier.

The bank said its Common equity Tier 1 ratio, a measure of financial strength, stood at 9.5 percent compared with 9.3 percent at the end of December.

Reporting by Silvia Aloisi; Editing by Lisa Jucca

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