Growing demand for loans boosted Unicred profits by 55%

Unicred reported a 55 percent increase in profits from a year earlier, as Italian banks released their first-quarter results last week after state-owned rival Monte de Pachi de Cena withdrew from the deal.

The bank’s € 1.1bn pre-tax profit for the third quarter was 26 percent ahead of analysts’ forecasts, where its revenue was even higher at 4.4bn.

Unicredit says it has increased debt across its regional divisions, excluding Eastern Europe, as the economic recovery has boosted demand for credit.

Andrea Orsell, who was Unicred’s chief executive for six months, said: “I am pleased to report a strong set of third quarter results that reflect the strength of our franchise, supportive market conditions, and client activity across all business lines. And a strong economic recovery, which is expected to be moderate. ”

The bank further said that Orcel will unveil its new strategic plan for the group, which will focus on simplification and digitization on December 9th, Investors Day.

Negotiations between Unicred and the Italian Treasury over the acquisition of the world’s oldest bank MPS broke down over the weekend because the two sides could not agree on the form of costly recapitalization.

Orcel, who is in charge of Unicredit, has been discussing the deal for half the time and he expected the bank to announce a deal in the third-quarter results.

Unicred is pushing for capital injections of up to bn 7bn in MPS, but the Treasury has indicated it is unwilling to pay much more than the initial projection of € 2bn to € 2.5bn.

The Treasury is now expected to pursue a separate plan for MPS, which is likely to include further capital increases.

Analysts speculate that Orcel will now look for other domestic acquisitions or focus on increasing UniCredit organically.

Orcel has already restructured UniCredit’s management team, simplified its structure, and reduced duplicate roles. The executive committee has been cut from 27 to 15, while the bank’s geographical structure has been redesigned to improve efficiency and reduce complexity.

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