UniCredit swings to Q1 profit, loan loss charges fall

MILAN Fri May 10, 2013 8:18am EDT

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MILAN May 10 (Reuters) - Italy's biggest bank by assets, UniCredit, returned to profit in the first quarter of 2013 thanks to lower loan loss provisions and strong trading income, it said on Friday.

UniCredit, the first Italian retail bank to release its results for the quarter, said its net profit came in at 449 million euros, compared with an analyst consensus distributed by the bank of 156 million euros. In the fourth quarter of last year UniCredit had posted a 553-million euro loss.

The bank said its Core Tier 1 ratio - a key measure of financial strength - stood at 9.46 percent at the end of March, rising to 9.64 percent when a series of recent disposals is taken into account. The ratio stood at 9.2 percent at the end of 2012.

Like other Italian banks, UniCredit has been struggling to keep a lid on mounting bad debts as the euro zone's third biggest economy struggles with its longest recession in 20 years.

However, after setting aside nearly 10 billion euros to cover for souring loans in 2012, the bank benefited from seasonally lower loan loss provisions in the first three months of the year.

Those charges stood at 1.2 billion euros in the period, down 73 percent from the fourth quarter of 2012. The bank said that for the second consecutive quarter, inflows of new bad loans had decreased in its Italian home market.

Most analysts however expect bad debts at Italian lenders to keep rising for the rest of 2013 and data from the Bank of Italy showed on Thursday non-performing loans grew in March at the highest rate since December 2011.

(Reporting By Silvia Aloisi, editing by Jennifer Clark)

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