Mediobanca Net Beats Estimates Boosted by Lower Provisions

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Mediobanca SpA, Italy’s biggest publicly-traded investment bank, reported fiscal third-quarter profit that beat analyst estimates on retail banking and investments as well as lower provisions.

Net income declined to 121.3 million euros ($138 million) from 205 million euros a year earlier, after a gain tied to a 102 million-euro disposal wasn’t repeated. That beat the 89.6 million-euro average estimate of four analysts in a Bloomberg survey.

“In absence of further negative events, Mediobanca will record a positive fiscal year and improve dividend distribution,” Chief Executive Officer Alberto Nagel said on a conference call. “A diversified business and the high quality of our assets allowed the bank to offset the adverse financial market trend.”

The CEO is focusing on the main business of corporate and investment banking as the lender breaks with its previous strategy of using stakes in companies to dominate Italian deal-making. In December, Mediobanca agreed to absorb Barclays Plc’s consumer-banking operations in the country.

“We expect the market to have an initial positive reaction to the results given core revenue trends, continued improvement in lending, better provisions and no asset quality issues,” Azzurra Guelfi, an analyst at Citigroup Inc., wrote in a note.

Mediobanca rose as much as 3 percent in Milan trading and was up 1.6 percent at 6.40 euros as of 9:30 a.m., giving the company a market value of about 5.6 billion euros. The stock is down about 26 percent this year.

Revenue was little changed to 502.7 million euros as lower income from trading outweighed an increase in net interest income and commissions driven by mergers and acquisitions and the capital-markets business.

Loan-loss provisions fell to 94.4 million euros in the quarter from 109.3 million euros a year earlier. Mediobanca’s common equity Tier 1 ratio fully loaded, a key measure of financial strength, fell to 13.2 percent as of March 31 from 13.4 percent at the end of December.

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