Banca Popolare di Milano Scrl, Italy’s oldest cooperative bank, returned to a quarterly profit a year after booking writedowns on goodwill and intangible assets.
Net income was 48.4 million euros ($65 million) in the second quarter after a loss of 195.6 million euros a year earlier, when the Milan-based lender took 360 million euros of writedowns. Earnings beat the 31.7 million-euro average estimate of three analysts in a Bloomberg survey.
Chairman Andrea Bonomi and Chief Executive Officer Piero Montani are seeking to revive profit by cutting costs and reorganizing governance. The bank will update its business plan, including projects on governance, by the end of October, it said in a statement today.
The Bank of Italy asked managers to resume talks to introduce more balanced governance, after opposition from unions and employees led Bonomi and Montani to abandon a plan in May to transform the bank into a joint-stock company. The bank said it will respond to the Bank of Italy’s review by Sept. 30.
“The bank still has a lot to do to revive and to improve governance,” Bonomi said in the statement.
Revenue advanced 27 percent to 457.8 million euros, boosted by higher income from trading and fees, and benefitting from a write back of the coupon on hybrid instruments booked in previous quarters. That helped counter a 20 percent increase in bad-loan provisions to 99.7 million euros.
Popolare di Milano’s core Tier 1 capital ratio, a measure of financial strength, fell to 7.45 percent at the end of June, hurt by a 500 million-euro repayment of state aid obtained in 2009. The lender approved a share sale in April for the same amount to restore capital ratios. The timing for the capital increase will be decided after the business plan update, the bank said.
Popolare di Milano, which holds an analyst conference call tomorrow at 9 a.m. local time, fell 2.2 percent to 37.87 cents in Milan trading, giving the bank a market value of 1.22 billion euros. The earnings were published after the market closed.