MILAN (Reuters) - Italy’s biggest bank, UniCredit, topped forecasts with its best first-quarter result since 2007 on Thursday and said it would shed bad loans more quickly than anticipated.
UniCredit reported a net profit of 1.1 billion euros ($1.3 billion) for January-March, above an average 766 million euro forecast in a consensus of 25 brokers provided by the company.
Revenues rose 4 percent from the previous quarter to 5.1 billion euros, mainly driven by fees, while the bank’s net interest income eased slightly.
Loan writedowns fell more than expected from a year earlier to 496 million euros. The bank also cut more costs in the first quarter than forecast.
UniCredit has embarked on a restructuring after hiring French banker Jean Pierre Mustier as chief executive in mid-2016. It raised 13 billion euros early last year in one of Europe’s biggest cash calls, to fund a balance sheet clean-up.
“First-quarter 2018 results are another tick in the box on the restructuring story — expect the stock to outperform today,” Jefferies analysts said in a note.
UniCredit said it expected its soured loans to total 37.9 billion euros at the end of 2019, which would be an improvement on a 40.3 billion euro target set in December.
To meet regulatory demands, Italian banks have been shedding billions of euros in loans that had soured due to a deep recession.
UniCredit plans to sell 4 billion euros in impaired loans this year, following a landmark 16 billion euro disposal in 2017.
The bank said its core capital stood at a solid 13.06 percent of assets after factoring in a new accounting rule requiring lenders to book expected losses, rather than just actual losses as previously.
($1 = 0.8427 euros)
Reporting by Valentina Za; Editing by Mark Bendeich