Net profit at €1.0 bn (-2.6% Q/Q, +1.1% Y/Y) in 2Q14. Main contributors are: Commercial Bank Italy with €574 m (+16.6% Q/Q and 33% RoAC), CEE & Poland with €392 m (+14.1% Q/Q at constant FX and 19% RoAC) and CIB with €213 m (-45.4% Q/Q and over 12% RoAC). Net profit reached €2.0 bn as of 1H14 (+7.1% H/H) leading to a risk adjusted profitability (RoAC) of 11.1%.
Net operating profit net of tender offers' proceeds strongly up at €1.8 bn (+9.1% Q/Q, +6.4% Y/Y) as growing revenues and declining costs more than compensate the increase in LLP. Net operating profit totalled €3.4 bn as of 1H14 (+2.8% H/H).
Revenues net of tender offers' proceeds12 increase to above €5.6 bn (+2.9% Q/Q, flat Y/Y) and display a high quality mix. Key contributors to such revenue growth are: Commercial Bank Italy with €2.1 bn (+1.3% Q/Q, +7.6% Y/Y), CEE & Poland with over €1.4 bn (+9.1% Q/Q, flat Y/Y) and Commercial Bank Austria with €0.4 bn (+13.4% Q/Q, +10.4% Y/Y).
Net interest income increases to €3.1 bn reaching €6.2 bn as of 1H14 (+3.3% Q/Q, +5.9% Y/Y and +4.7% H/H) as the re-pricing of deposits offsets the subdued dynamics on the lending side.
Customer loans decrease slightly to €426.2 bn (-1.5% Q/Q) mainly due to Institutional and Market Counterparts (-15.6% Q/Q). Commercial loans held up well in 2Q14, increasing by €1.3 bn mostly driven by CEE & Poland.
New medium-long term lending flows in Italy confirm the positive trend registered in the past quarters, with €3.1 bn new loans granted in 2Q14 (+18.5% Q/Q). Total new lending in 1H14 reached €5.9 bn (+52.3% H/H) driven by household mortgages (+146.2% H/H) and corporate loans (+62.5% H/H).
Direct funding slightly down to €450.3 bn (-0.3% Q/Q) mainly as effect of the tender offer of network bonds in Italy executed in 2Q14 for €2.5 bn and despite the positive trend registered in CEE & Poland and CIB.
Fees and commissions increase to €1.9 bn (+3.3% Q/Q, +8.5% Y/Y), in excess of €3.7 bn as of 1H14 (+4.9% H/H) thanks to the strong growth registered in all components: investment services fees amount to €841 m (+1.9% Q/Q, +10.5% Y/Y) confirming the rebound in asset under management and bancassurance products demand registered in 1Q14; financing services fees amount to €462 m (+5.2% Q/Q, +9.4% Y/Y) driven by credit related fees in CIB; transactional banking fees amount to €585 m (+4.0% Q/Q, +4.9% Y/Y).
Dividends and other Income amount to €309 m (+107.6% Q/Q, +2.2% Y/Y) mainly thanks to Yapi Kredi's strong quarterly performance (€86 m vs. €50 m in 1Q14) and to the higher dividends received on the stake in Banca d'Italia (€84m vs. €15m in 2Q13).
Trading income net of tender offers' proceeds12 decreases to €314 m (-34.2% Q/Q, -50.6% Y/Y) mostly affected by c. €120 m credit adjustments for counterparty risk in CIB.
Total costs further down to €3.3 bn (-2.1% Q/Q, -2.7% Y/Y) reaching €6.6 bn as of 1H14 (-2.3% H/H) in line with the Group's cost reduction targets. Staff expenses reach €2.0 bn (-3.9% Q/Q, -5.0% Y/Y) while other administrative expenses and depreciation and amortization remain broadly stable in the quarter. Cost/ income ratio, net of tender offers' proceeds12, decreases to 58% (vs. 61% in 1Q14). Commercial Bank Italy displays a sound cost/income ratio, net of tender offers' proceeds12, of 46%.
Loan loss provisions (LLP) at €603 m, showing seasonal growth Q/Q while reducing Y/Y (+15.3% Q/Q, -1.4% Y/Y) reaching €1.1 bn as of 1H14 (-1.4% H/H). Cost of risk in CEE stands at 119bps (+13bps Q/Q, -28bps Y/Y), in CIB at 43bps (+43bps Q/Q, -26bps Y/Y), in Commercial Bank Italy at 90bps (+5bps Q/Q, +22bps Y/Y) and in Asset Gathering at 49bps (+26bps Q/Q, +18bps Y/Y), resulting in a total cost of risk for the Core Bank of 56bps (+8bps Q/Q, +1bp Y/Y).
Risk and charges amount to €148 m, including c. €30 m booked in Hungary as a result of the new law establishing the abolition of the bid/offer spreads applied to retail foreign-currency loans. Restructuring costs amount to €25 m and profit from investments stands at €42 m, including €132 m capital gain from the disposal of the stake in SIA.
Income taxes10 amount to €518 m, comprising c. €117 m one-off impact from DTA write-off following the reduction of IRAP tax rate which will translate into a lower tax charge on a running basis going forward. Consequently, effective tax rate lands at approximately 31%.