Italian bank Unicredit sees Q2 profit more than double on higher interest, cost-cutting

MILAN — Italian bank UniCredit SpA on Tuesday said its second-quarter profit more than doubled on gains from buying back old debt.

UniCredit, Italy's biggest bank by assets, reported net profit of 361 million euros ($478 million), against 169 million euros in the same period of 2012. Revenue also rose 5.5 percent to 6.4 billion euros, including a 254 million euro return on buying back 4.2 million in bonds, the banks said.

CEO Federico Ghizzoni said the results show "the first positive signs of turnaround in Italy," as the bank also recorded an increase in new loans to businesses and households. But he cautioned analysts that "the condition of the Italian economy is still weak" despite "some minor signs of potential recovery," including a smaller than expected decline in gross domestic product in the second quarter.

"It is too early to say we are out of recession," he said.

Italy's economy contracted for the eighth straight quarter, shrinking 0.2 percent compared with the previous three months, when it had shrank 0.6 percent on the previous period.

Unicredit's provisions for bad loans dropped for the third straight quarter, down 9 percent to 1.7 billion euros from 2012. The bank's Core Tier 1 ratio, a key measure of health, stands at 11.4 percent, above European regulatory requirements.

UniCredit shares rose 2.74 percent to 4.28 euros, compared with a 0.82 contraction of the benchmark FTSE MIB index.