UniCredit beats expectations with rise in profits

Italian bank UniCredit, in the midst of a massive overhaul, said on Thursday that its net profit rose modestly in the second quarter, beating expectations.

UniCredit beats expectations with rise in profits
Photo: Filippo Monteforte/AFP

While analysts had expected profits to decline to €676 million in the April-June period, instead they rose by 3.3 percent from the second quarter last year to €945 million ($1.1 billion).

UniCredit has undertaken a major restructuring of its business after it was among the worst performers in stress test results published by Europe's EBA banking regulator in July 2016.

“UniCredit's good 2017 second quarter results confirm the early positive impact of Transform 2019 already seen in the first quarter” when the bank earned a net profit of €907 million, chief executive Jean-Pierre Mustier said in a statement.

The restructuring programme dubbed Transform 2019 will have UniCredit axe the equivalent of 14,000 full-time jobs from an overall workforce of 101,000 by the end of 2019.

It also plans to shed €17.7 billion in so-called non-performing loans, which are loans deemed unlikely ever to be paid back.

It pushed non-performing loans down by over €2 billion during the quarter to 53.0 billion at the end of June. As a percentage of overall loans, they dropped by four tenths of a point to 11.0 percent.

Revenue fell 7.8 percent from the same quarter last year to €4.85 billion, but was stable from the previous quarter.

“The performance of the bank is very positive and very reassuring,” Mustier said later in a conference call.

Unicredit's shares jumped nearly 4.5 percent higher in opening trading, while Milan's FTSE Mib index edged up 0.1 percent.


Deutsche Bank to pay $130m to settle US bribery probes

Deutsche Bank will pay $130 million to settle a foreign bribery probe and fraud charges in precious metals trading, US officials announced on Friday.

Deutsche Bank to pay $130m to settle US bribery probes
A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP
The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.
The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.
In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.
In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.
In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.
The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.
“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.
“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”
“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.