UniCredit reports 50% drop in first-quarter profit

UniCredit Tiriac Bank said its first-quarter net profit dropped 50% year-on-year to 64 million lei (EUR 16 million) in a period of stagnant market and growing credit risk.
Net profit under RAS for the same period stood at 61 million lei. Profitability levels remained good, although lower compared to last year. Annualized ROE came in at 11.5% and ROA at 1.3%.

The bank’s first quarter revenues dropped 8% year-on-year, to 310 million lei due to the high non-recurring trading income last year. Operating expenses decreased by 3% from the same period of last year, while cost-to-income ratio further improved to 44.9%.

Unicredit’s capital adequacy ratio stood at 12.83% under RAS, after full reinvestment of 2009 net profit. The net operating profit covered 1.8 times the net provisions for the period, the latter growing near 2.5 times year-on-year.

“The first quarter this year proved to be still recessionary for the Romanian economy and tough for the banking system. Credit risk continued growing led by increasing companies’ defaults. We consider our performance satisfactory on this background and look forward for signals of rebound in second half 2010”, said Rasvan Radu (photo), CEO UniCredit Tiriac Bank.

The balance sheet total reached 20 billion lei (€5.1 billion), up 8.5% compared to year-ago period, and at the end-2009 level. Total outstanding on-balance-sheet loan portfolio increased by a higher-than-average 5.1% rate year-to-date.

Customer deposits totaled 10 million lei, 5% lower year-to-date, similar to the system and mainly due to appreciation of the leu.

Credit risks continued going up, yet better than the system. Non=performing loan ratio stood at 7.4% of total bank lending, while related provision coverage grew up to 5.4% under IFRS and 8.1% under RAS.

The consolidated total assets of UniCredit Tiriac Bank, UniCredit Leasing Corporation and UniCredit Consumer Financing on a full consolidated basis totaled 23 billion lei, at the level of 2009. The shareholders’ equity stood at 2.3 billion lei, while consolidated 1Q 2010 net profit of the group at 60.3 million.

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