UniCredit bank, heavily involved in lending in eastern Europe, reported on Wednesday a halving of net profit for 2009, because of loan payment problems by customers hit by the economic crisis.
The halving of profits went hand in hand with a doubling of charges for under-performing and devalued loans, but underlying operating profit jumped by 20.3 percent. UniCredit, the leading Italian bank with extensive activities in eastern and central Europe, reported a 57.6-percent drop in net profit, but even so outperformed analysts’ expectations. The net outcome was 1.702 billion euros (2.3 billion dollars). In the fourth quarter, the net figure on a 12-month comparison fell by 26.5 percent to 371 million euros.
But that was far better than expected by analysts polled by Dow Jones Newswires who had expected 50 million euros. The bank booked a total of 8.313 billion euros in provisions and for the reduced value of its loan book for the whole of the year. This was more than double the figure for 2008 of 3.7 billion euros. However, operating profit rose by 20.3 percent to 12.248 billion euros. And net banking income, the difference between the cost of taking money in from depositors and the price of lending it out and a key measure of retail banking performance, rose by 2.6 percent to 27.572 billion euros.
The bank said that it would resume paying a cash dividend for last year, of 0.03 euros per share. For 2008, it had paid dividend in the form of shares in order to conserve cash. At the beginning of last year the bank, which had decided not to accept help from the government, raised capital of 4.0 billion euros to strengthen shareholders’ funds. At the end of 2009, the so-called Tier One ratio shareholders’ funds to risk rose to 8.47 percent from 6.58 percent. The bank announced in a separate statement on Wednesday the sale of 2.84 percent of Italian insurance group Generali in line with requirements laid down by competition authorities.
Milan, March 17, 2010 (AFP)
