Milan (Reuters) – The Italian bank Monte dei Paschi di Siena again gained profit with cost savings.
Despite the declining yield and the decrease in customer assets, the traditional Geldhaus gained a surplus of 91 million euros in the third quarter, after 101 million in the second quarter, as reported by the nationalized institute. Costs declined by 3.5 percent due to job cuts. However, the Italian budget dispute also leaves its mark on Monte Paschi: asset management has weakened and the capital pill has faded. Founded in the 15th century, the bank is considered to be the oldest surviving money house in the world.
Consolidated earnings declined by 2.7% in the fourth quarter, mainly because clients purchased less investment products. In addition, in July and September, they chose money from their check accounts, while client deposits fell by 1.4 billion euros.
The budget spat between the Italian government and the EU Commission has boosted Italian bond yields in recent months, reducing the value of bank balances. Under the transitional provisions, Monte Paschi's Common Equity Tier 1 fell to 12.8% at the end of September, to 13% in June.
The bank is still sitting on a bad credit. It is working on selling additional loans up to 3.3 billion euros. As a result, the rate of bad loans on the balance sheet dropped to about 16 percent from 19.4 percent at the end of September, the Institute explained. Monte Paschi had problems with a bad loan badger, and he had to save himself last year.