Italy's largest bank posted better-than-expected net profit on Tuesday, despite setting aside 1.7 billion euros ($2.3 billion) to cover losses on bad loans.
UniCredit reported net profit of 361 million euros ($479 billion) in the second quarter — a dramatic 114 percent increase year-on-year. This topped a consensus estimate distributed by the bank of 349 million euros.
Quarterly revenue rose 2 percent year-on-year to 6.4 billion euros, boosted by a 254 million euro capital gain from a bond buy-back, and ongoing cost-cutting measures. These include the closure of 52 bank branches in Italy in the second quarter, plus 35 branch cuts in Germany since the start of this year. By 2014, the bank aims to reduce its headcount in Germany — one if its key markets — by almost 800.
In an interview with CNBC, UniCredit CEO Federico Ghizzoni said the bond buyback was a "one-off", which would not be repeated in the second half of 2013.
"Nevertheless... this transaction was possible because of the very good liquidity position of the bank... now we must do more work on core valuation," Ghizzoni said.
He added that he was mildly optimistic about both the Italian economy and the European economy as a whole.
"In the second quarter we should see some recovery in European GDP [gross domestic product], and also in Italian GDP. We hope, especially on the credit side, to see some pick-up. Not a fantastic one, but some recovery, yes," he said.