By Pietro Lombardi
Shares in UniCredit SpA are under pressure after the bank cut its revenue outlook for the year due to the expectations that interest rates will be lower for longer while business sales boosted second-quarter net profit.
The results comes at a challenging time for European banks, with low interest rates putting pressure on their business. In late July, CaixaBank and Banco de Sabadell SA cut their income guidance for the year and mentioned the impact of low interest rates.
The Italian bank, which is in the last months of its three-year strategic plan, said Wednesday that it now sees revenue at 18.7 billion euros ($20.9 billion) this year, down from a previous target of EUR19 billion that included the effects of the deconsolidation of FinecoBank SpA.
"In the prevailing environment with rates expected to be lower for much longer, we adjust our FY19 revenue guidance," Chief Executive Jean Pierre Mustier said.
The bank confirmed its cost and profit targets.
Net profit for the period was EUR1.85 billion compared with EUR1.02 billion a year earlier. On an adjusted basis, which excludes one-offs, net profit grew 0.4% to EUR1.03 billion. Revenue fell 4.6% on year to EUR4.52 billion.
These results compare with analysts' expectations of a net profit of EUR2.23 billion on revenue of EUR4.62 billion, according to a consensus forecast provided by the bank.
The results "showed softer core revenues, but ongoing delivery on cost reduction and NPLs de-risking," Citi analysts said.
UniCredit shares were down 2.5% at 0740 GMT, while Italy's benchmark FTSE MIB index was up 0.3%.
Net interest income--the difference between what lenders earn from loans and pay for deposits, and a key profit driver for retail banks--fell 2.1%. Net fees and commissions were down 3% while trading income plunged 19%.
"We delivered another solid set of results in the first half of 2019 in what was a tough macroeconomic environment," Mr. Mustier said.
Write to Pietro Lombardi at email@example.com