MILAN, Aug 7 — Italian bank UniCredit cut its 2019 revenue target today, citing “a tough macroeconomic environment” marked in particular by low interest rates that undermine lending operations.
In the second quarter of the year, the bank’s revenues declined by 4.6 per cent from the same period a year earlier to €4.51 billion (RM21.1 billion), a statement said, below a forecast of 4.61 billion compiled by UniCredit from 25 finance sector analysts.
“In the prevailing environment with rates expected to be lower for much longer, we adjust our full-year 2019 revenue guidance from €19 billion to €18.7 billion,” it added.
As central banks keep their reference interest rates at historically low levels, commercial banks struggle to maintain profits in their core activity of lending to businesses and individuals.
During a telephone news conference UniCredit chief executive Jean-Pierre Mustier emphasised that the bank was confirming its adjusted net profit target of €4.7 billion.
In the second quarter of the year, net profit jumped by 81 per cent on an annualised basis to €1.85 billion, owing in large part to the sale in July of UniCredit’s remaining stake in the Finecobank asset management company.
The result nonetheless missed the average analyst’s forecast of €2.22 billion by a wide margin.
UniCredit’s closely watched Common Equity Tier 1 (CET 1) ratio, which is the ratio of funds available to absorb possible losses, came in at 12.08 per cent however, indicating that it maintained a strong buffer.
UniCredit shares showed a loss of 2.7 per cent at €10 in morning trading in Milan, while the FTSE MIB index on which they are listed was 0.12 per cent higher overall. — AFP
