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UniCredit posts YOY rise in Q2 profit, warns of negative impact to capital ratio

UniCredit SpA's second-quarter reclassified net profit attributable to the group increased to €945 million from €916 million in the same period in 2016, despite a €310 million impact from negative currency effects due to its disposal of Bank Pekao SA.

Excluding the impact from the Bank Pekao disposal, the group's second-quarter net profit totaled €1.3 billion.

Second-quarter net interest income fell on a yearly basis to €2.65 billion from €2.67 billion, while net fees and commissions increased to €1.51 billion from €1.40 billion. Net trading, hedging and fair value income declined to €462 million from €860 million a year earlier.

Net write-downs on loans and provisions stood at €564 million in the second quarter, down from €884 million a year earlier. Other charges and provisions amounted to €135 million, down from €477 million a year ago.

For the first half, the bank reported net attributable profit of €1.85 billion, compared to the year-ago €1.32 billion.

As of June 30, the group's fully loaded common equity Tier 1 ratio was 12.80%, compared to 11.45% at the end of March. The company expects the successful disposals of Bank Pekao and Pioneer Global Asset Management SpA to contribute 84 basis points to its CET1 ratio at the end of the third quarter. UniCredit completed the sale of Pioneer to Amundi SA in July.

The bank warned that its CET1 ratio is expected to be negatively affected by higher risk-weighted assets due to business growth and model changes and procyclicality in the second half and the first-time adoption of IFRS9 in 2018.