* Q1 net income rises 41 pct in adjusted terms on higher
* Analysts say CET1 capital ahead of expectations
* CEO says no plan to change dividend payout in 2018-2019
(Adds comments from analyst call)
By Valentina Za and Paola Arosio
MILAN, May 11 UniCredit beat
expectations with a jump in first-quarter net profit to 907
million euros ($986 million) on Thursday as new boss Jean Pierre
Mustier leads a turnaround at Italy's biggest bank by assets.
UniCredit hired 56-year-old French banker Mustier in the
middle of last year to address concerns over weak capital and
tackle a large bad loan pile. He started selling assets and
embarked on a clean-up of the balance sheet that led to a loss
of 12 billion euros in 2016.
First-quarter net income topped an average forecast of 612
million euros in an analyst consensus provided by the bank. It
was up 41 percent year-on-year excluding restructuring costs
that hit the first quarter of 2016.
By 1125 GMT UniCredit shares rose 4 percent, outperforming a
"Strong headlines across the board on asset quality, capital
and profit recovery should all support continued re-rating of
the stock," broker Jefferies said in a note.
UniCredit's result echoed that of rival heavyweight Intesa
Sanpaolo which last week reported a first-quarter net
profit of 901 million euros supported by a strong asset
UniCredit and Intesa account for 40 percent of all Italian
banking assets with the rest spread among the country's
remaining 600 lenders.
Analysts say the financial crisis has widened a gap between
Italy's lenders, with the bigger ones able to tap investors for
capital and the smaller ones poorly placed to offset losses from
UniCredit is more geared than its rival towards serving
Italy's business world, comprising mostly small and medium-sized
"UniCredit and Intesa are quite different ... UniCredit is a
very interesting restructuring story that could better suit
investors with less risk aversion," Santander wrote in a recent
UniCredit raised 13 billion euros in a share issue this
year, boosting its best-quality CET1 capital ratio to 11.45
percent in March, which analysts said was ahead of forecasts.
The agreed sales of asset manager Pioneer and Polish unit
Bank Pekao will further lift UniCredit's CET1 capital
to above 12 percent this year.
Revenue rose 3.4 percent to 4.8 billion euros on higher fees
and a sharp increase in trading income. Net interest income
improved on a quarterly basis and the bank confirmed it would
total 10.2 billion euros in 2017.
UniCredit said it wrote down loans for 670 million euros in
January-March, down 12 percent from a year earlier and after
booking 10 billion euros in writedowns in the fourth quarter.
Soured debts that rose to nearly one fifth of total loans
following a deep recession are the focus of market concerns over
Italian banks as they curb their already weak profitability.
"Let's say we're obsessed with balance-sheet asset quality,"
Mustier told analysts.
UniCredit said it had sold 700 million euros in problem
loans so far this year. On Wednesday, it agreed to offload a
further 500 million euros in the current quarter.
($1 = 0.9200 euros)
(Reporting by Valentina Za; editing by Jason Neely and Keith