UBI Fourth-Quarter Profit Beats Estimates; Shares Advance

Unione di Banche Italiane SCPA, Italy’s fourth-largest bank, reported a fourth-quarter profit that beat analysts’ estimates on higher revenue and a tax gain because of regulatory changes. The shares rose.

Net income was 148.9 million euros ($206 million) compared with a net loss of 140 million euros a year ago, when the bank booked 144 million euros in one-time costs for staff reductions. UBI was expected to report a profit of 8.2 million euros, according to the average estimate in a Bloomberg survey of five analysts.

“The numbers should support current outperform rating,” Italian investment bank Mediobanca SpA said in an e-mailed report to clients today. Earnings were “overall in line but huge fiscal benefit one-off.”

Chief Executive Officer Victor Massiah is reducing costs to strengthen UBI’s finances and boost profitability as stricter rules by regulators hurt lending and squeeze margins. UBI is one of the 15 Italian banks being reviewed by the European Central Bank as part of a three-stage asset quality review and stress test before it takes over banking supervision for the euro area in November.

UBI rose as much as 4.8 percent in Milan trading. The shares advanced 4.4 percent to 6.68 euros at 9:45 a.m., giving the company a market value of 6 billion euros.

Tax Benefit

UBI said it made a tax gain of 204.7 million euros in the quarter after regulatory changes introduced at the end of last year. Revenue rose 6.8 percent from a year earlier to 951 million euros due to higher income from lending and trading. The bank increased its annual dividend to 6 cents a share from 5 cents a year earlier.

Loan-loss provisions rose to 366.3 million euros from 352.5 million euros.

UBI’s core Tier 1 ratio climbed to 12.6 percent on Dec. 31 from 12.5 percent at the end of September. The common equity ratio under fully applied Basel III capital rules, a key measure of financial strength, was more than 10 percent at the end of December, the bank said in the statement.

The company said it signed an agreement with unions to cut 183 jobs on a voluntarily basis by June. It said it expects 15 million euros of savings from the reduction.

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 editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Mark Bentley, Jon Menon

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