Italy’s largest bank, UniCredit SPA (BIT:UCG) said its first quarter net profit dropped by half due to lower interest and trading income.
Italy’s largest bank by asset reported that net income decreased to 449 million euros from 914 million euros last year, while total revenues were 6.08 billion euros, compared to 7.11 billion euros last year. It was able to reduce the cash reserve for bad loans to 1.2 billion euros, while a key measure of health viz.; bank’s Tier 1 capital ratio rose to 11.03 percent.
Nomura equity research in its today’s report highlighted that UniCredit’s net income was higher than its estimates of 260 million euros. It observes UniCredit SPA (BIT:UCG)’s NII was relatively stable last quarter, though down 13 percent year-on-year.
According to Nomura, UniCredit SPA (BIT:UCG)’s costs were in line, while loan loss provisions were better than expected. However, Nomura feels its asset quality deterioration continues.
Daragh Quinn and team assigns ‘reduce’ rating to UniCredit SPA (BIT:UCG) with a target price pegged at 3.20 euros.
UniCredit SPA (UCG) Ratings
On the other hand, Credit Suisse Group AG (NYSE:CS) in its today’s equity research report assigns ‘neutral’ rating to UniCredit SPA (BIT:UCG) with a target price of 3.82 euros.
Credit Suisse feels UniCredit’s results look clean with 500 million euros one-off gains from disposals and additional liability management expected in Q2.
Ignacio Cerezo and team feels overall UniCredit’s quality of the beat can be put in question, but these were better than expected results from UCG, with no visible deterioration of any key trends against Credit Suisse’s estimates.
Credit Suisse Group AG (NYSE:CS) in its report feels UniCredit’s NII of 3.31 billion euros and commissions of 2.0 billion euros coming in line with CS offset by stronger trading income, based on favorable market conditions earlier in the year.
Credit Suisse Group AG (NYSE:CS) observes UniCredit SPA (BIT:UCG) management’s tone looking more confident than in previous quarters, as they are able to reiterate most of the targets announced at the time of Q4 results.
Credit Suisse Group AG (NYSE:CS) feels funding and capital news flow remains positive, with UniCredit SPA (BIT:UCG) managing to build up its solvency ratios despite low headline profitability through asset disposals, liability management and RWA reductions.
Ignacio Cerezo and team feels despite recent outperformance, there is nothing wrong in this set of numbers, and the team expects positive market reaction, though most of these trends viz. NII improvement, LLP declines are already incorporated in their forecasts, and hence see little changes to their 14-15E RoTBV expectations for now.
