Italian bank UniCredit reported better-than-expected second-quarter profit on Wednesday and announced that it was buying a Belgian digital bank with its own cloud-based IT platform for 370 million euros ($401 million).
UniCredit, led by former UBS investment banking chief Andrea Orcel since 2021, has been on the centre of speculation about possible mergers and acquisitions after attempts to tackle Germany’s Commerzbank and Italy’s Banco BPM failed.
UniCredit said the acquisition of Belgian bank Aion and its cloud-based core banking system Vodeno will add a team of 200 engineers, developers and data scientists.
Banks all over the world are facing the challenge of migrating their legacy IT systems to the cloud. To solve this problem, UniCredit’s competitor Intesa Sanpaolo, for instance, is working with British cloud banking technology provider ThoughtMachine.
“The transaction represents one of the first steps by a bank to acquire full ownership of a new technology (without dependencies on third-party providers of core banking services),” UniCredit said.
Net profit rose 5% to 2.7 billion euros within the second quarter from the previous three months, beating the typical forecast of two.4 billion euros by analysts surveyed by the bank, as earnings performed higher than expected.
The logo of the Italian international banking group UniCredit is on the facade of the group’s headquarters within the Porta Nuova district, seen from the perspective of Palazzo Lombardia on September 29, 2023 in Milan, Italy.
Emanuele Cremaschi | Getty Images News | Getty Images
Amid rate of interest spikes within the eurozone, Italian banks have announced plans to extend their net fees to offset the shrinking gap between loan and deposit rates, which has pushed banks’ profits to record levels in recent quarters.
UniCredit said net loan revenues fell 0.4 percent between April and June in comparison with the primary quarter, but fees rose 0.9 percent on a quarterly basis and 10 percent on an annual basis.
Total sales during this era recorded a smaller than expected quarterly decline of 0.7% to EUR 6.3 billion.
UniCredit barely increased its revenue forecast for the 12 months to over 23 billion euros, but maintained its goal of net profit of over 8.5 billion euros for 2024. At least 90 percent of that is to be distributed to shareholders, mostly through share buybacks.
