MILAN (Reuters) – Italian state-owned lender Monte dei Paschi di Siena <BMPS.MI> posted a third-quarter net profit of 91 million euros (79 million pounds) with cost cuts helping to counter weaker revenues.
The bank said it had shed staff and lowered operating costs by 3.5 percent in the three months through September.
Revenue fell 2.7 percent in the quarter with commissions suffering due to the sale of fewer investment products and interest income easing 1.4 percent.
Net profit in the second quarter was 100.9 million euros.
Rising uncertainty in Italy, where an anti-austerity government has locked horns with the European Commission over next year’s budget law, is hurting lenders’ asset management business.
Home mortgages helped drive a 0.5 percent quarterly rise in client loans, Monte dei Paschi said.
The bank said its direct funding from clients decreased in the July-September period mostly due to a 1.4 billion euro drop in current account deposits.
Monte dei Paschi, which is restructuring after last year’s state bailout, was for years at the forefront of Italy’s banking crisis and suffered massive deposit losses at times of stress.
The Italian banking sector, which is recovering after heavy loan losses following a recession, has come under pressure again due to a spike in Italy’s debt costs, which erodes lenders’ capital buffers.
After suffering a significant capital blow in the second quarter due to the shrinking value of its sovereign holdings, Monte dei Paschi said its core capital stood at 12.8 percent at the end of September on a temporary phase-in regime for new capital rules, down from 13 percent in June.
By 1204 GMT shares in the Tuscan lender, the world’s oldest still in business, were down 0.7 percent against a 1.3 percent drop in Italy’s banking sector <.FTIT8300>.
Monte dei Paschi said its gross soured loans stood at 19.4 percent of total lending at the end of September.
The bank, which completed a record 24 billion euro bad loan sale earlier this year, said it was working on further disposals for up to 3.3 billion euros, which would reduce its impaired loan ratio to around 16 percent.
($1 = 0.8814 euros)
(Reporting by Valentina Za, editing by Louise Heavens)