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Italy's UBI Banca Q2 net profit falls 46.6% YOY

Unione di Banche Italiane SpA booked a second-quarter group profit attributable to shareholders of the parent €48.7 million — down 46.6% from €91.2 million in the same period a year ago.

Net interest income for the period fell 3.9% on a yearly basis to €440.6 million from €458.6 million in 2018, while net fee and commission income rose 2.8% year over year to €412.0 million. Net income from trading, hedging and disposal fell 20.2% to €17.6 million from €22.1 million in the second quarter of 2018. Net income from insurance operations came in at €3.9 million, down 29.1% from €5.5 million a year ago.

Net operating income grew 2.2% year over year to €321.0 million in the second quarter from €313.9 million in 2018. Net impairment losses for credit risk stood at €263.4 million, up 80.2% from €146.1 million in the previous year.

The Italian lender's profit attributable to shareholders of the parent for the first half came in at €130.9 million — down 37.3% from €208.9 million in the first half of 2018.

The bank said the profit was influenced by a €75.0 million net negative impact stemming from the disposal of gross bad loan positions amounting to approximately €900 million and by expenses related to a trade union agreement which amounted to €42.6 million.

UBI Banca's nonperforming exposures ratio, as of June 30, stood at 9.97%, down from 12.41% in 2018. On a pro forma basis, the first-half ratio is 9.23% when considering the disposal of lease bad loan positions, which will be completed by the end of 2019. Coverage for nonperforming exposures grew by 190 basis points versus the first quarter and if write-downs are included coverage grew by 259 basis points.

Net total nonperforming exposures fell to €5.31 billion at June-end from €5.98 billion at the end of December 2018.

The lender's phased-in and fully loaded common equity Tier 1 ratios stood at 12.05% and 12%, respectively, as of June-end, versus 11.52% and 11.47% at March-end. The group's leverage ratio came in at 5.23% on a phased-in basis and 5.21% on a fully loaded basis for the same period.

UBI Banca said the consolidated results include the impact of the International Financial Reporting Standards 16 and thus the June 30 figured are being compared to the figures as they were re-stated on Jan. 1.