May 10, 2018 / 7:00 AM / a year ago

UniCredit beats forecasts with best Q1 result since 2007

MILAN (Reuters) - Italy’s biggest bank, UniCredit (CRDI.MI), topped forecasts with its best first-quarter result since 2007 on Thursday and said it would shed bad loans more quickly than anticipated.

FILE PHOTO: Unicredit's bank logo is pictured on block notes and pens at the headquarters in Milan, Italy, February 9, 2016. REUTERS/Stefano Rellandini/File Photo

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. [nI6N1NR01V]

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

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