Mediobanca’s Quarterly Profit Doubles on Fewer Writedowns

Mediobanca SpA, Italy’s biggest publicly traded investment bank, said fiscal second-quarter profit more than doubled after recording fewer writedowns on its equity holdings.

Net income in the three months ended Dec. 31 rose to 14.8 million euros ($19.4 million) from 6.6 million euros a year earlier, the Milan-based bank said in a statement today. It booked about 200 million euros of writedowns on financial assets a year ago. Earnings beat the 7.4 million-euro average estimate of five analysts surveyed by Bloomberg.

Chief Executive Officer Alberto Nagel is trying to deleverage and reduce the bank’s equity stakes to boost profit and strengthen finances after the company recorded writedowns of more than 400 million euros last year. Mediobanca expects to present a new strategic plan by June, including a review of the lender’s stake in Assicurazioni Generali SpA, the CEO said today.

“By June we will have a definitive framework of the level of Generali we want to keep, as we will have a better understanding of the rules of Basel III,” Nagel said in a conference call today. “By that time we will be ready to have a new three-year plan starting from July 2013.”

Mediobanca is Generali’s biggest shareholder with a 13.2 percent stake.

Lower Revenue

Total revenue in the quarter fell 8 percent to 457.6 million euros as higher profitability at the equity-accounted companies was offset by lower income from trading and lending. The results include 95 million euros of writedowns on Mediobanca’s stake in Telco, the holding that controls Telecom Italia SpA. Mediobanca’s loan-loss provisions increased to 121.4 million euros from 109.5 million euros a year ago.

Nagel said he expects pressure on revenue to continue in the second half as signs of a recovery in corporate activity take time to convert into new deals.

The lender’s core Tier 1 capital ratio, a measure of financial strength, rose to 11.8 percent as of Dec. 31 from 11.5 percent at the end of September.

Mediobanca fell 8.6 percent to 4.86 euros in Milan trading today. Italian banking shares plunged as inconclusive election results triggered renewed concern about the sovereign-debt crisis, driving the spread between Italian and German government bond yields higher.