The logo of the Italian international banking group UniCredit is on the facade of the group’s headquarters within the Porta Nuova district, as seen from the Palazzo Lombardia on September 29, 2023 in Milan, Italy.
Emanuele Cremaschi | Getty Images News | Getty Images
UniCredit raised its investor premium forecast for the 12 months after posting a well-beating quarterly net profit on Tuesday and further increasing capital levels.
Italy’s second-largest bank said net profit for the three months ended March 31 was 2.6 billion euros ($2.8 billion), compared with the typical of analyst forecasts for the corporate at 2.13 billion euros.
Revenue also beat expectations as UniCredit, together with larger rival Intesa Sanpaolo, highlighted a recovery in net fees, which rose 16% quarter-on-quarter, while income from the loan and deposit rate gap fell 0.9% .
As rates of interest peak, banks are working to interchange lending profits with fees from sales of investment products, which UniCredit increased by 36% within the quarter.
A net profit of over 8.5 billion euros is anticipated for the complete 12 months, it said, after previously forecasting a net profit for 2024 at across the level of 2023.
After deducting tax credits, the bank’s annual net profit last 12 months amounted to eight.6 billion euros, which it distributed entirely to shareholders through share buybacks and dividends.
UniCredit said it might achieve that distribution this 12 months. Having set a 90% payout goal for 2024, this implies the corporate expects net profit of around €9.6 billion or paying out a few of its excess capital reserves.
Tier 1 capital, a key measure of a bank’s financial strength, rose to 16.2% of risk-weighted assets (RWA) from 15.9% at the top of last 12 months, beating expectations. RWAs declined within the quarter, partly on account of lower lending but in addition risk transfer transactions by the bank to release capital.
CEO Andrea Orcel, a former UBS investment banker who joined UniCredit in 2021, has focused on activities that maximize returns on capital employed and offer attractive payouts to investors, primarily through share buybacks.
