Estimated read time: 2-3 minutes
MILAN (AP) — Italian bank UniCredit on Thursday said second-quarter profits grew by 3 percent as it undergoes a major turnaround under CEO Jean Pierre Mustier, who was appointed one year ago.
Since then, Italy's biggest bank by assets has disposed of its Pioneer investment arm, the Pekao Polish subsidiary and raised 13 billion euros in capital, while reducing personnel and branches in overall cost-cutting moves.
The bank said net profit was 945 billion euros ($1.1 billion) in the three months ended June 30, compared with 916 million euros a year earlier, as the bank disposed of non-core units, cut costs and saw higher fees and commissions.
The Pekao sale, completed in July, cost the bank 310 million euros in negative currency devaluations; excluding the Pekao disposal, net profit improved to 1.3 billion euros, the bank said.
"UniCredit's good 2017 second-quarter results confirm the early positive impact of Transform 2019, already seen in Q1," Mustier said, referring to the turnaround plan. "All our teams remain focused on the execution and the successful delivery of the plan."
UniCredit has been working under the leadership of Mustier to raise capital, after the bank had one of the weakest showings in Europe during a stress test last year. His actions come against the backdrop of a government bailout of smaller Italian banks taken to shore up trust in the Italian banking system.
"We are very convinced that the risk profile of the Italian banking sector is going down, thanks to the government's actions," Mustier told journalists. "Now there are no more risk or systemic impacts which can be seen in the Italian banking sector, which is very good for the country."
The CEO had by his side a small stuffed Elk, dubbed Elkette, which he adopted as a good-luck charm when he took over the job and which has accompanied him on public appearances throughout his first year.
Revenues were down 8 percent, an as increase in fees and commissions was offset by lower interest income and trading income. The quarter also included deep cost-cutting and a decrease in its non-performing loan portfolio.
The bank's Core Tier 1 ratio, a measure of its health, was 12.8 percent in the quarter, up from 11.45 percent at the end of March.