Italy’s Unicredit reports Q1 earnings up 16.5 percent on higher commissions, lower loan risk

Unicredit Q1 earns up 16.5 percent

MILAN — Italy’s largest bank, Unicredit, on Wednesday reported that its first-quarter earnings rose 16.5 percent as commissions rose and trading income nearly tripled.

The bank also said that it retained Bank of America Merrill Lynch to evaluate strategic options for its Pioneer Global Asset Management unit. CEO Alessandro Profumo told analysts that the unit is not big enough to be maximize value, and that the timing to consider options, including possible partnerships, was right since the bank was not pressed for capital.

“We are sure that this is the right moment because we are not under pressure,” Profumo said.

Net profit in the quarter ended March 31 was euro520 million ($660 million), up from euro447 million a year earlier, Unicredit said in a statement.

Unicredit shares dropped 0.3 percent to euro1.93 on the Milan Stock Exchange.

Trading profit was euro560 million, recovering from a loss of euro94 million in the same period a year ago.

The bank also said net commissions rose 17.5 percent to euro2.2 billion in the quarter. Loan loss provisions declined from the previous three quarters to euro1.79 million, but were up from euro1.65 million a year earlier.

Profumo said loans were flat, due mostly to consumer demand, and not because the bank was holding back. One exception was Turkey, where loans were growing, while there was some growth in mortgages in Italy.

Core Tier One ratio, a sign of a bank’s health, remained basically unchanged at 8.45 percent. UniCredit Group’s exposure to sovereign bonds of Greece, Spain, Ireland and Portugal — countries most under pressure by the European debt crisis that has raised the risk of possible defaults on bonds — at the end of the quarter totaled euro1.6 billion.