UPDATE 1-UniCredit improves its fiscal year loan loss forecast after its Q2 profit forecast.



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MILAN, July 30. (Reuters) – Italy’s UniCredit posted better-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 for the remainder 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.

UniCredit, which has long resisted government pressure to bail out Monte dei Pasha, said it would buy only “portions” of the Tuscan bank in a deal that would keep its capital stock unchanged while increasing 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.

Cutting loan losses also helped boost profits for Barclays and Santander earlier this week. (1 dollar = 0.8420 euros) (Reporting by Valentina Za, editing by David Holmes and Vinaya Dvivedi)


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