UniCredit Improves Fiscal Year Loss Forecast Following Second Quarter Profit Forecast

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MILAN, July 30. (Reuters)UniCredit in Italy CRDI.MI reported higher-than-expected second-quarter net income on Friday thanks to a reduction in loan loss provisions, which the lender now expects to be lower than expected by the end of the year.

UniCredit improved its 2021 baseline net income forecast, excluding one-off items, to over € 3 billion ($ 3.6 billion) from approximately € 3 billion, while confirming its revenue and expense targets.

Italy’s second bank said late Thursday it would discuss with the country’s treasury a possible acquisition of ailing state rival Monte dei Paschi di Siena. BMPS.MI

UniCredit, which has long resisted government pressure to bail out Monte dei Paschi, said it would buy only “select pieces” of the Tuscan bank in a deal that would not change its buffers but would boost earnings per share by double-digit percent. Discussions will unfold over the next few weeks.

Net income was € 1.03 billion ($ 1.2 billion), compared with an average analyst estimate of € 736 million based on the bank’s consensus.

This compares with 420 million euros a year earlier, when the group wrote off 937 million euros in loans to prepare for the fallout from the pandemic.

Loan loss provisions for the April-June period were € 360 million, below analysts’ forecasts of € 647 million.

UniCredit said it now expects its cost of risk, which measures loan provisioning, to be below 50 basis points, up from a previously forecast below 70 basis points.

The reduction in loan losses also helped boost Barclays’ profits. BARC.L and Santander SAN.MC earlier this week ($ 1 = € 0.8420)

(Reporting by Valentina Za, editing by David Holmes and Vinaya Dvivedi)

((valentina.za@thomsonreuters.com; +39 02 6612 9526;))

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.

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