UniCredit Board of Directors Approved Consolidated Results for 2008
OREANDA-NEWS. March 24, 2010. The Board of Directors of UniCredit approved the consolidated results for 2008 which show the Group’s portion of net profit at ˆ1,702 million, ˆ371 million of which generated in the fourth quarter.
The fourth quarter 2009 performance provides further confirmation of a few positive elements that emerged during the third quarter, such as: improvement in the balance sheet and capital structure, declining operating costs and increasing net commissions. There was also a drop in net trading, hedging and fair value income, which was impacted by a sectorwide slowdown with respect to the excellent performance recorded in the first three quarters of 2009.
In 2009 operating income reaches ˆ27,572 million, an increase of 2.6% YoY (7.2% YoY on a constant currency and perimeter basis), and ˆ6,443 million in fourth quarter 2009, an increase of 5.7% YoY but a drop QoQ due almost entirely to the decrease in trading income.
Net interest held well YoY coming in at ˆ17,304 million in 2009 (-5.8% YoY, but only -1.9% YoY on a constant currency and perimeter basis), despite the elimination, in third quarter 2009, of overdraft charges and the less then favourable interest rate environment. In the fourth quarter net interest amounts to ˆ4,017 million, an increase with respect to the ˆ3,927 million recorded in third quarter 2009, thanks to a lower cost of wholesale funding and non-recurring items.
Net commissions total ˆ7,780 million in
Net trading, hedging and fair value income in 2009 amounts to ˆ1,803, a significant recovery with respect to the -ˆ1,969 million recorded in 2008 and confirmation of the Group’s ability to react quickly to improved market conditions. In fourth quarter 2009 net trading, hedging and fair value income amounts to ˆ152 million, positive despite a quarter which was much more unfavourable for the investment banking business, but still less than the excellent result recorded in third quarter 2009 (ˆ715 million).
In 2009 other net income of ˆ373 million (ˆ69 million of which in the fourth quarter), is basically in line with the ˆ368 million reported in 2008.
Operating costs amount to ˆ15,324 million in
In 2009 payroll costs drop a noticeable 8.3% YoY (5.8% YoY on a constant currency and perimeter basis), coming in at ˆ9,098 million. In fourth quarter 2009 the figure reaches ˆ2,277 million, in line with the ˆ2,276 million recorded in the prior quarter and less than the ˆ2,385 million recorded in fourth quarter 2008.
Other administrative expenses, net of recovery of expenses, reach ˆ4,945 million in
Amortization, depreciation and impairment losses on intangible and tangible assets in 2009 amount to ˆ1,281 million, compared to ˆ1,312 million in 2008. The figure reaches ˆ350 million in fourth quarter 2009.
The cost/income ratio comes in at 55.6% in 2009 (59.0% in the fourth quarter), showing marked improvement over the prior year (62.1%).
Operating profit in 2009 amounts to ˆ12,248 million, ˆ2,640 million of which in the fourth quarter (lower than in the prior quarter due to the decrease in net trading, hedging and fair value income).
In 2009 provisions for risks and charges increase YoY reaching ˆ609 million, ˆ232 million of which in the fourth quarter.
Net impairment losses on loans and provisions for guarantees and commitments amount to ˆ8,313 million in 2009, equal to a cost of risk of 142 basis points. In fourth quarter 2009 the item decreases with respect to the prior quarter (from ˆ2,164 million in third quarter 2009 to ˆ2,068 million).
Gross impaired loans at the end of December 2009 total ˆ57.6 billion, an increase of 7.7% QoQ (9.2% QoQ net the effect of the cancellation of default interest in
The coverage ratio of total gross impaired loans at December 2009 is 46.1% which reflects a 61.3% coverage of the NPLs and a 26.0% coverage of the other problem loans.
Integration costs amount to ˆ258 million in 2009, an increase with respect to the ˆ140 million recorded in 2008 reflecting, above all, the significant commitment to greater staff efficiencies. In fourth quarter 2009 conditions were such that a part of the prior provisions could be released and, therefore, the quarter figure is a positive ˆ63 million.
Net investment income totals ˆ232 million in 2009, an increase with respect to the ˆ207 million recorded in the prior year. Fourth quarter 2009 shows positive net investment income of ˆ217 million, compared to ˆ181 million in the prior quarter due, above all, to the pre-tax capital gain from the disposal of the quotas held in the real estate fund Omicron.
In 2009 income tax for the period amounts to ˆ1,009 million (an increase with respect to the ˆ627 million recorded in the prior year, which benefited from the positive effects of goodwill deductions), with a tax rate of 30.6%. Income tax in fourth quarter 2009 amounts to ˆ124 million.
Minorities in 2009 amount to ˆ332 million compared to ˆ518 million in 2008, which still did not reflect fully the purchase of the minority interests in HVB and UniCredit Bank
The impact of the Purchase Price Allocation drops in 2009 from the -ˆ301 million recorded in 2008 to -ˆ257 million, -ˆ62 million of which attributable to the fourth quarter.
The Group’s portion of net profit in 2009 is ˆ1,702 million compared to ˆ4,012 million in the prior year, achieved, however, under much less favourable global macroeconomic conditions. The quarterly trend shows profit dropping from ˆ490 million in second quarter 2009 to ˆ394 million in third quarter 2009, reaching ˆ371 million in fourth quarter 2009.
Total assets at December 2009 total ˆ929 billion (ˆ958 billion at September 2009), a drop of 3.0% QoQ and of 11.2% since the beginning of 2009 (-ˆ117 billion). Please note that the reduction in the balance sheet items was achieved by paying special attention to certain areas. In 2009 the trading assets fall by ˆ71 billion, reaching ˆ134 billion at the end of December (a decrease of ˆ12 billion was reported in fourth quarter 2009, -8.0% QoQ). Net of derivatives, trading assets at December come in at a more contained level of ˆ59 billion or 6.3% of total assets and down 30.2% YoY. Net interbank funding falls by ˆ68 billion in 2009 (-70.5% YoY) to ˆ29 billion. Due to both the decline in total assets and the increase in net equity, the Group’s leverage ratio1 improves in fourth quarter 2009, as well, reaching 24.4 (22.1 pro-forma the capital increase announced on September 29th, 2009), a solid result in light of the fact that the ratio calculation includes the derivatives subject to netting agreements (net of which the leverage ratio at December 2009, pro-forma the capital increase, would be 20.9).
The Core Tier 1 ratio at December 2009 reaches 7.62%: profits, improved reserves and a decrease in risk weighted assets translated into a rise of more than one percentage point (+104 bp) with respect to the prior year, excluding the effects of the capital increase. The Core Tier 1 ratio maintained its growth trend in the fourth quarter: an excellent result if the 14 bp booked entirely in the fourth quarter for the proposed UniCredit and Pekao dividend are considered. The Tier 1 ratio is 8.63% and the Total Capital ratio 12.02%. Pro-forma the capital increase announced on September 29th, 2009 and successfully completed in February 2010, the Core Tier 1 ratio reaches 8.47%, the Tier 1 ratio 9.49% and the Total Capital ratio 12.88%, a level which will make it possible to finance the future recovery.
The drop in risk weighted assets, down by ˆ60 billion (-11.7% YoY at ˆ452.3 billion), made possible also thanks to the strong control of market RWAs (more than halved in 2009 at ˆ9 billion), was key to the improvement of the capital ratios. In fourth quarter 2009, while noticeable results were achieved in terms of reducing assets, the decline in risk weighted assets slowed.
At the end of December 2009 the Group’s organization consists of a staff2 of 165,062, a further reduction of 1,359 over September 2009 and of 9,457 over December 2008. The reduction in 2009 involves all the business divisions.
The Group’s network at the end of December 2009 consists of 9,799 branches (9,892 at September 2009 and 10,251 at December 2008).
1Calculated as the ratio of total assets net good will and other intangible assets (the numerator) and net equity (including minorities) net goodwill and other intangible assets (the denominator).
2“Full time equivalent“. In the figures reported the companies consolidated proportionately, including the KFS Group, are included at 100%.
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