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Mediobanca Quarterly Profit Rises 57% on Asset Sale Gain

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Oct. 28 (Bloomberg) -- Mediobanca SpA, Italy’s biggest publicly traded investment bank, said fiscal first-quarter profit rose 57 percent, boosted by the sale of a stake in Telecom Italia SpA.

Mediobanca jumped as much as 4.1 percent in Milan trading after saying net income climbed to 171.2 million euros ($236.4 million) in the three months ended Sept. 30 from 109 million euros a year earlier. Earnings include a 58.8 million-euro gain from the sale of part of its holding in Telco SpA, the vehicle that controls Telecom Italia, the country’s biggest phone company.

Chief Executive Officer Alberto Nagel is planning to sell stakes in companies, including Assicurazioni Generali SpA and RCS Mediagroup SpA, to boost profit. The firm will focus on its main business and forecasts revenue from banking activities of 2.1 billion euros by 2016 under a three-year plan announced in June.

The figures showed an “encouraging recovery of net interest income” together with continued pressure on commissions and a small unexpected trading loss, Anna Maria Benassi, head of Italian equity research at Kepler Cheuvreux in Milan, wrote in an e-mailed comment to clients today.

Lower Revenue

Mediobanca was 3.8 percent higher at 6.57 euros by 11:32 a.m. in Milan, bringing the gain this year to 41 percent and valuing the company at 5.6 billion euros.

Revenue in the quarter fell to 416.3 million euros from 453.4 million euros a year earlier on lower income from fees and trading. Mediobanca’s loan-loss provisions increased to 128.9 million euros from 111.4 million euros a year earlier, while operating costs fell 2.9 percent to 168.6 million euros.

“The transformation story and market positioning are unique in the Italian banking space,” Azzurra Guelfi, a London-based analyst at Citigroup Inc., wrote in a note on Oct. 23. “We see management’s strategy as ideal for the company’s development.”

The core Tier 1 capital ratio, a key measure of financial strength, fell to 11.5 percent as of Sept. 30 from 11.7 percent at the end of June, Mediobanca said. The current market value of the securities portfolio is equal to 5.1 billion euros compared with 4.3 billion euros on June 30, with unrealized gains of more than 1 billion euros on Generali.

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

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

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