Italy’s largest lender by assets, UniCredit,
has reported a near-50% fall in domestic retail banking pre-tax
profits in the year to 31 December to €619m ($878.5m).

Customer deposits at UniCredit’s Italian
retail banking business slumped by almost a quarter from the
previous year (23.4%) to €188.2bn, while loans fell by 2.3%
year-on-year to €171.4bn.

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At group level, UniCredit recorded a 22.2%
slump in net income from the previous financial year to €1.3bn.

The bank said the drop in net profit was the
result of a €362m one-off impairment charge at its unprofitable
Kazakhstan subsidiary, as well margin pressure and integration
costs for the consolidation of its businesses in Italy.

UniCredit closed 186 branches in Italy in the
course of the year, leaving it with a branch network of 4510 in its
home market, as it is merging its corporate, retail and private
banking business under the One4C project.

The group had a total branch network of 9,617
including its Italian units as of 31 December.

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Integration costs for One4C rose by 9.1% from
the previous year-end to €282m in 2010.

UniCredit chief executive Federico Ghizzoni
said in February that the bank had no intentions of selling its
Kazakhstan subsidiary AO ATF Bank.

Net interest income for the UniCredit group
fell 7.6% to €16.4bn in the twelve months to year-end 2010.

On a positive note, net fees and commissions
income increased by 10.5% to €8.5m.

Provisions for loan losses fell by 18.2% to
€6.9bn as asset quality in the bank’s CEE-network improved.

Pre-tax income from UniCredit’s operations in
central and Eastern Europe, rose by 16.7% in the twelve months to
year-end 2010 to €1.1bn.

UniCredit’s total assets remained flat at
€929.5bn in fiscal 2010.

Italy’s second largest bank by assets,
Intesa
Sanpaolo, reported its full year results on 17 March.