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Bad loan sale weighs on profit at Italy's UBI, fees hit record level

Bad loan sale weighs on profit at Italy's UBI, fees hit record level
FILE PHOTO: Pages of a cheque book of Ubi Banca Popolare di Bergamo are seen in this picture illustration February 11, 2016. REUTERS/Alessandro Bianchi -
Alessandro Bianchi(Reuters)
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MILAN (Reuters) – Italy’s fifth largest bank UBI Banca <UBI.MI> said on Friday it has posted record fees in the second quarter while net profit fell due the provisions related to the recent sale of 900 million euros (£824.15 pounds) of bad loans.

Net profit fell to 48.7 million euros, after a negative impact from the soured debt disposal for 70 millions euros.

The share of gross impaired loans over total lending fell to 9.23% from 10.36% at the end of March, thanks to the sale announced in July.

The bank said it would continue to manage bad loans internally. Further sales will be considered only if they will not have a big impact on capital levels.

Net commissions rose by 2.8% from the previous quarter to 412 million euros, a level which the bank said was its best ever, and were ahead of analyst estimates distributed by the bank. The bank said the good trend for commissions is expected to continue under current market conditions.

Net interest income, a measure of how much money a bank makes from its core retail business, fell by 1.1% to 440.6 million euros, slightly below analyst expectations. The fall was due to non-recurring negative items of 7.4 millions and a 4 million euros increase in the cost of funding.

The bank’s common equity tier 1 ratio, a key measure of financial strength, stood at 12%, compared with 11.47% at the end of March.

(Reporting by Gianluca Semeraro; editing by Silvia Aloisi)

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