Bloomberg News

Mediobanca Second-Quarter Profit Falls on Higher Writedowns

February 22, 2012

(Adds speculation on Fondiaria starting from ninth paragraph.)

Feb. 22 (Bloomberg) -- Mediobanca SpA, Italy’s biggest publicly traded investment bank, said second-quarter profit fell 95 percent, hurt by writedowns of Greek bonds and its stake in RCS MediaGroup SpA.

Net income declined to 6.6 million euros ($8.7 million) in the three months ended Dec. 31 from 135.3 million euros a year earlier, the Milan-based bank said in a statement today. That compares with the 10.3 million-euro average estimate of seven analysts surveyed by Bloomberg.

Mediobanca, which makes most of its money from equity holdings, selling loans and advising businesses, is boosting its retail business to improve profitability. Chief Executive Officer Alberto Nagel said in October he wants to cut costs to compensate for declining net interest income.

“Mediobanca is the most attractive bank stock in Italy after having missed the sub-sector rebound that had started in mid-January,” Domenico Santoro, a Nomura analyst in London, wrote in a note yesterday. He rates the stock a “buy.”

Extraordinary losses in the first six months of the lender’s fiscal year included 55.2 million euros of writedowns for its stake in media company RCS, 34 million euros on Delmi SpA shares and 114.5 million euros on Greek bonds.

Interest Income

Net interest income in the second quarter rose 1.3 percent to 272.8 million euros, while trading income climbed to 108.7 million euros from 33.4 million euros a year earlier.

The lender’s core Tier 1 capital ratio, a key measure of financial strength, was little changed at 11 percent as of Dec. 31, confirming Mediobanca as one of the best-capitalized lenders in the country.

The bank rose 1.6 percent at 2:57 p.m. in Milan trading, giving the bank a market value of about 4.2 billion euros.

Mediobanca, which has lent more than 1 billion euros to Fondiaria-SAI SpA, Italy’s second-biggest insurer, is advising the company on its restructuring plan that involves a merger with competitor Unipol Gruppo Finanziario SpA.

Henri De Castries, CEO of French insurer AXA SA, and Salvatore Ligresti, who controls Fondiaria-SAI through his holding company, showed up at Mediobanca’s headquarters today, news agency Ansa said, fuelling speculation about a transaction between the two insurers. Fondiaria rose as much as 7.6 percent to 1.74 euros after the news.

AXA may consider an offer for some of Fondiaria’s units or for the entire company, daily La Stampa reported Jan. 31, citing unidentified financial sources.

--Editors: Dan Liefgreen, Steve Bailey, Marco Bertacche

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net Francesca Cinelli in Milan at fcinelli@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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