Mediobanca First-Quarter Net Surges 92% on Fewer Writedowns

Mediobanca SpA, (MB) Italy’s biggest publicly traded investment bank, said fiscal first-quarter profit almost doubled after year-earlier writedowns on Greek bonds weren’t repeated.

Net income in the three months ended Sept. 30 rose to 109 million euros ($141 million) from 56.8 million euros a year earlier, the Milan-based firm said in a statement today. That beat the 95.2 million-euro average estimate of five analysts surveyed by Bloomberg. The lender booked about 70 million euros of writedowns on financial assets a year earlier.

Chief Executive Officer Alberto Nagel is cutting costs and diversifying business to boost profit at the Milan-based bank after the company booked writedowns of more than 400 million euros last year for impairments on equity stakes and loans.

“Revenue will remain under pressure in the current environment, so we will continue to work on cost cutting as well as on defending margins,” Nagel said at the annual shareholders meeting in Milan today. First-quarter results “were helped by market trends and the lack of writedowns,” he said.

Total revenue in the quarter fell 5 percent to 453.4 million euros as higher income from trading was offset by lower profitability at the equity-accounted companies, whose contribution declined to 28.1 million euros from 73 million euros. Income from trading rose to 62.5 million euros from 3.8 million euros a year earlier, boosted by a positive market performance in the period.

Mediobanca’s loan-loss provisions increased to 111.4 million euros from 102.8 million euros a year ago, while operating costs declined 12 percent to about 174 million euros.

The lender’s core Tier 1 capital ratio, a measure of financial strength, was unchanged at 11.5 percent as of Sept. 30. The bank’s “sound ratios don’t need to be boosted through a capital increase,” Nagel told shareholders.

Mediobanca is “reviewing the bank’s equity exposure to reduce the volatility of results,” Nagel said. The company is also trimming the weight of loans “through a more selective process,” the CEO said.

To contact the reporters on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net; Francesca Cinelli in Milan at fcinelli@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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