MILAN (AP) " UniCredit, the top Italian bank that has been struggling to improve its financial strength, said Wednesday that its second-quarter profits beat expectations, jumping 75 percent thanks to the sale of investments and cost cuts.
The bank reported net profit of 916 euros ($1 billion) in the three months ended June 30, compared with 522 million a year earlier. Analysts had forecast 715 million euros. Revenue was up 7 percent to 6.1 billion euros, boosted by its Italian banking business.
The group, which is Italy's largest by assets, is under intense investor scrutiny due to its exposure to bad loans, Italy's weak economy and aggressive past expansions.
A test of Europe's 51 biggest banks showed UniCredit's finances would be satisfactory in case of a renewed economic crisis. But the measure of its financial health was still the fourth-weakest.
"The results of the test did not come as a surprise to us," UniCredit's new CEO, Jean Pierre Mustier, told investors.
Since being named in June to improve profitability and the bank's capital structure, Mustier has sold interests in Polish bank Pekao and Fineco internet banking subsidiaries, reorganized management, and promised to present a full business review to investors by the end of the year.
The bank said its common equity Tier 1 ratio, a key gauge of a bank's health that measures readily available capital as a percentage of overall assets, dipped to 10.3 percent at the end of June from 10.5 percent at the end of March. The Fineco and Pekao sales in July boosted the level back to 10.5 percent.
Loan loss provisions were down 14 percent from last year, at 513 million euros.
The business review "will be looking at all assets and activities, without exception, and with particular focus on capital optimization opportunities and further improved risk discipline," Mustier told an analyst conference call in his debut presentation.
Even assets considered strategic, namely German subsidiary HVB, its central and eastern Europe operations and corporate investment banking, will be closely reviewed "to ensure an intensified focus on efficiency and asset optimization."
On Wednesday, the bank announced the sale of its card processing business in Germany, Italy and Austria to SIA, boosting capital by 440 million euros.
The bank's shares dropped 4 percent to 1.76 euros.
This story has been automatically published from the Associated Press wire which uses US spellings