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Italian bank UniCredit sees profit dip as prepares overhaul

Associated Press Associated Press 10/11/2016 By COLLEEN BARRY, AP Business Writer

MILAN — Italy's largest bank, UniCredit, on Thursday issued its last earnings report before a highly anticipated business overhaul under new management, reporting a 12 percent drop in third quarter profits due to a drop in revenue.

CEO Jean Pierre Mustier, who took over in July, told analysts that they were hard at work finalizing the business plan, to be delivered Dec. 13, but that he would not address rumors or speculation.

"The commercial bank is the backbone of our business, and is creating value for all our stakeholders," he said. "Going forward, we shall further strengthen our commercial banking franchise and continue to deliver our unique western, central and eastern European network to our extensive client base."

He said that the plan would address corporate governance going forward, but said he was operating under any interference or pressure, adding that "I have an extremely arm's length relationship with the board."

The bank noted in its earnings report that decisions taken in the new plan regarding assets and the credit portfolio could substantially influence the fourth-quarter results.

The bank said net profit in the period ending Sept. 30 was 447 million euros ($493 million), compared with 507 million euros in the same period last year. The results take into account the sale of a stake in the internet banking business FinecoBank.

Revenues were up slightly at 5.5 billion euros, with higher trading income, which doubled to 510 million euros, partially offsetting lower net interest income and fees and commissions. Net interest income was down 2.6 percent to 2.9 billion euros, and fees and commissions slipped 2.3 percent at 1.9 billion euros.

The bank sold assets and cut loans during the quarter to boost its core capital ratio, boosting the Core Tier 1 ratio to 10.82. The bank has sold a stake in the online bank FinecoBank and Polish subsidiary Bank Pekao in the quarter.

The bank's shares were briefly suspended after the earnings report due to excessive volatility, before resuming trading up 7 percent at 2.38 euros.

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