Abdelrahman
UniCredit Reports Strong Q4 Earnings Amid Strategic Growth Plans
On Tuesday, Italy’s second-largest bank, UniCredit, announced impressive fourth-quarter results, surpassing analyst expectations and enhancing shareholder returns as the market keenly observes the bank’s merger and acquisition initiatives.
The net profit attributable to UniCredit reached €1.969 billion (approximately $2.03 billion) for the fourth quarter, exceeding the projected €1.803 billion, as per a consensus compiled by LSEG. Additionally, total revenues during this period hit €6 billion, which also surpassed the anticipated €5.898 billion.
Key highlights from the fourth-quarter results include:
- A return on tangible equity (RoTE) of 11.5%, down from 19.7% in the previous quarter.
- A Common Equity Tier 1 (CET1) capital ratio of 15.9%, slightly lower than the 16.1% reported for the previous quarter.
- Operating expenses amounted to €2.5 billion, marking a 9.5% increase from the previous quarter.
For the full year, UniCredit’s net profit grew by 8.1%, totaling €9.31 billion. The bank has committed to increasing shareholder returns in 2025, now targeting a dividend payout ratio of 50% of net profit, up from 40% in 2024. Furthermore, UniCredit aims for a RoTE exceeding 17% from 2025 to 2027, compared to the 17.7% projected for 2024.
CEO Andrea Orcel commented that UniCredit is initiating the next phase of its strategic vision, aiming to accelerate growth and widen the gap with competitors, while also closing the valuation divide to solidify UniCredit’s position as a leading bank in Europe.
However, despite the robust outlook, the bank anticipates revenues will exceed €23 billion in 2025, a decline compared to the €24.8 billion achieved last year, largely due to anticipated pressures on its business in Russia and a moderate reduction in expected net interest income.
Since the latter half of last year, UniCredit has played a pivotal role in Italy’s ongoing consolidation efforts within the banking sector, including its unexpected increase in stake in Germany’s Commerzbank and its takeover proposal for local rival Banco BPM by the end of 2024. Although Banco BPM has rebuffed UniCredit’s initial offer, Orcel described his proposal as merely a "fair starting point."
The German administration has criticized UniCredit’s "very aggressive, very opaque" approach towards Commerzbank, while Rome has shown resistance to its initiatives domestically, especially amid ongoing government plans to create a third major Italian banking entity alongside Intesa Sanpaolo and UniCredit.
Further complicating the scenario, UniCredit announced a new stake acquisition of 4.1% in Italy’s foremost insurer, Generali Group, although it emphasized that this move does not reflect any strategic interest.
Importantly, Italy’s golden power legislation allows the government to intervene or impose conditions on significant corporate takeovers, both domestic and foreign, within critical sectors including banking, energy, defense, and communications.
As market participants closely monitor UniCredit’s dual pursuit strategy, Orcel emphasized, "Any inorganic growth must enhance our standalone case and adhere to our rigorous financial and strategic standards."
