Core capital at the biggest bank in Italy by assets, UniCredit, moved higher during the 2015 first quarter, but not sufficient enough to suppress the jitters of investors, which sent shares lower.
The net profit at the bank for the three months through March dropped 28% to 512 million euros or $575 million compared to the same period one year ago.
Earnings were boosted by a rise of 82% in its trading income as well as higher fees. However, the bank took a charge of 91 million euros tied to its contribution in the Single Resolution Fund, which is a fund that is meant to finance bank closures in the euro zone.
That figure includes a contribution of 25 basis points for the deal it sealed last month to merge its Pioneer segment with Santander Asset Management and is far below the 13.2% level that was reported Monday by Intesa Sanpaolo its domestic rival.
Shares at the bank turned lower following the posting of the quarterly results, with analysts and traders citing the core capital figure as the big reason for the drop.
The results were within or slightly better than those of analysts, with the net operating margin strong. The reaction in the market was due to the CET 1 that continues to be weaker that others such as Intesa. At this time, Unicredit is paying the price for that gap, said an analyst in Milan.
Unicredit repeatedly ruled out any need for more capital. Provision for loan loss or the amount the bank must set aside in cash to cover bad loans, was at 980 million euros, which was 42% lower that its previous quarter, as the economy in Italy shows new signs of emerging slowly from its lengthy recession.
The bank announced that of its revenues of 5.7 billion euros during the quarter, its unit of Commercial Banking contributed 2.2 billion, its investment and corporate banking contributed 1.1 billion and its eastern and central European operations more than 976 million euros.
