Salem Radio Network News Wednesday, September 22, 2021

Business

Monte dei Paschi cuts capital shortfall after H1 profit

MILAN (Reuters) – Monte dei Paschi (MPS) on Thursday swung to a first-half net profit and said it faced a smaller-than-expected capital shortfall, as Italy’s Treasury presses on with talks to sell the Tuscan bank to UniCredit.

MPS said it still planned to raise 2.5 billion euros ($2.96 billion) in cash next year if it failed to secure a buyer after a Europe-wide banking health check-up last week showed MPS’ capital would be wiped out by a negative economic shock.

UniCredit last week agreed to enter exclusive talks with the Treasury to buy parts of the world’s oldest bank and allow the state to cut its 64% stake. The sale process follows a year of on-and-off talks over MPS, complicated by a change of leadership at UniCredit, Italy’s second biggest bank.

MPS’s first-half net income totalled 202 million euros from a 1.1 billion euro loss a year earlier.

Shares in MPS rose 4.9% by 1432 GMT, outperforming a 0.8% rise in Italy’s banking index.

MPS said net profit between April and June came in at 83 million euros, above a 10 million euro average forecast by four analysts surveyed by Reuters.

MPS said it expected a capital shortfall of less than 500 million euros as of June 30, 2022, further reducing an estimate it had originally put at 1.5 billion euros and later cut to less than 1 billion euros.

Revenues in the second quarter totalled 740.4 million euros, also slightly ahead of expectations and better than the year-ago figure.

In a sign of improving operating trends, net fees and income from the core lending business were up from the first quarter, while overall revenue declined quarter-on-quarter due to strong trading gains between January and March.

($1 = 0.8446 euros)

(Reporting by Valentina Za; editing by Agnieszka Flak and Jane Merriman)

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