UniCredit Profit Up 29% in First-Quarter

UniCredit said Thursday that first-quarter net profit rose 29% as the bank benefited from strong growth in Italy and central and eastern Europe. It also said it is looking at merger options, including with Rome-based Capitalia and France's Societe Generale.

Outstripping analyst forecasts, the Milan-based bank said net profit rose to 1.78 billion euros ($2.41 billion) from 1.38 billion euros in the same period in 2006. Revenue rose to 6.58 billion euros ($8.9 billion) from 5.96 billion euros in the same period last year.

Net interest income rose to 3.35 billion euros ($4.53 billion) from 3.07 billion euros.

Shares of UniCredit, Italy's largest bank by market value, have gained 15% to 7.64 euros ($10.34) since the beginning of the year, and investors have said that they expect the lender to make a major acquisition to boost its size.

Chief Executive Alessandro Profumo confirmed that the bank has had contacts with Societe Generale, among others, but said an acquisition would be considered only if it can create value for UniCredit shareholders.

"SocGen would be a value-accretive option," Profumo said recalling also a statement UniCredit made in late April commenting on market talk of a potential merger plan with the French bank.

UniCredit also has said it is considering Capitalia as a possible merger option but has no concrete plans. Observers believe UniCredit will expand its operations in Europe as its merger with German group Hypo-Vereinsbank, or HVB, is almost completed.

"UniCredit will remain a European company," Profumo said when asked to comment about the possibility of merging with an Italian peer.

The bank has also teamed up with Russian airline Aeroflot as one of three groups to present preliminary offers for Italy's state-controlled carrier Alitalia.