UNICREDIT and Intesa Sanpaolo yesterday reported unexpectedly strong profits for the third quarter, in part as a result of major steps to clean up their balance sheets earlier this year.
Intesa took impairments of €5.8bn (£4.5bn) in the first quarter of the year, and Unicredit wrote down €13.7bn for 2013.
As a result, the banks have been able to focus more on new business.
Unicredit’s profits came in at €744m for the third quarter, up 80 per cent on the same period of 2013.
Its Italian and eastern European units performed strongly.
“Profits were above our estimates, as although operating performance was weaker than expected, loan loss provisions fell strongly,” said Nomura analyst Daragh Quinn.
“We maintain our positive view on the stock, given the likely ongoing improvement in asset quality and low valuation.”
Intesa Sanpaolo’s profits more than doubled on the year, from €217m in the third quarter of 2013 to €483m this year.
Unicredit’s shares fell 3.3 per cent and Intesa’s slid 0.18 per cent.