UniCredit profit drops as loan default provisions surge

Unicredit

(MarketWatch) – UniCredit SpA’s provisions for bad loans rose by almost a third in the second quarter while revenue declined, but net profit surpassed analysts’ expectations.

In the second quarter, the bank set aside 937 million euros ($1.11 billion) for credit losses, up from the EUR707 million it had stowed away a year earlier.

Net profit for the period was EUR420 million, down from EUR1.85 billion in the same period last year, when they included the sale of the bank’s stake in FinecoBank SpA (FBK.MI), the Italian bank said Thursday.

On an underlying basis, net profit fell 49%.

Revenue dropped 7.7% on year, hit by lower net interest income and fees and commissions.

Analysts had forecast a net profit of EUR335 million on revenue of EUR4.12 billion, according to a consensus forecast provided by the bank.

The bank confirmed its profits guidance for next year. It also confirmed its guidance for a cost of risk of between 100 basis points and 120 basis points for this year.

“We saw the first signs of a commercial recovery at the end of 2Q20 as economies began to open up across most of our core markets,” Chief Executive Jean Pierre Mustier said.

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