UniCredit shares fall as one-off charges hurt Q3 profit

UniCredit shares are in the red Thursday, as the Italian bank reports a disappointing third-quarter earnings update.

UniCredit shares fall as one-off charges hurt Q3 profit

UniCredit shares are lower Thursday, as the Italian Bank’s third quarter earnings disappointed, weighed down by a near €1 billion impairment related to its Turkish investments. Meanwhile, a non-recurring charge, attributed to US sanctions violations, also affected the bank’s profits.

By 1410 BST, UniCredit shares were 4.13% lower at €11.32. The stock had recently been showing signs of recovering, from a tough period.

UniCredit Q3 earnings

Earlier Thursday, Italian bank UniCredit reported its third quarter earnings. While total third-quarter revenues grew 2% from a year earlier to €4.8 billion, profits disappointed.

Q3 net profits hit €29 million, sharply down from the €2.82 billion profit reported in the third quarter of 2017. While year-ago profits benefitted from a €2.1 billion capital gain on the sale of asset manager, Pioneer Investments, Q3 2018 profits were hurt by different one-off occurrences.

UniCredit said it booked an €876 million loss due to its stake in Turkish bank Yapi Kredi. Further write downs relate to US sanctions violations.

“UniCredit has delivered strong underlying Q3 results and I am proud of the performance of our teams in an increasingly challenging macro-economic environment,” said UniCredit CEO, Jean Pierre Mustier.

“During the quarter we took decisive actions related to non-recurring events; including an 846 million Euro impairment of our stake in Yapi and additional provisions relating to the upcoming settlement of alleged US sanctions violations,” Mustier added.

Outlook

Looking ahead, the bank remains positive about its future performance, as when the one-off charges are removed, its investment-related earnings and stable and profitable fees structure proved a positive.

“We confirm our FY19 net profit target of 4.7 billion Euro and a RoTE of above 9%, with Group Core RoTE above 10%,” Mustier said. “As a team we continue to focus on executing Transform 2019, which remains well ahead of plan, and will keep working hard to confirm UniCredit as a pan-European winner.”

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