UniCredit raises payout target to 40% after record profit

Unicredit CEO says the bank's transformation is not over yet

Unicredit It pledged on Tuesday to return 5.25 billion euros ($5.69 billion) to investors based on its 2022 results, setting one of the most ambitious payout targets among European banks after posting its best profit in more than a decade. Taking it forward

The Italian bank said net profit came in at 2.46 billion euros in the three months through December, more than double the average forecast of 1.10 billion euros ($1.2 billion) from analysts polled by the bank.

This figure includes an incentive of 852 million euros from the write-up of deferred tax assets.

“The year has gone very well, obviously,” CEO Andrea Orcel told CNBC’s Joumanna Bercheche on Tuesday after the results.

“Especially given that we started the year on the back foot with the Ukraine hypothesis…we repositioned and we refocused and then little by little we took all the hits we got in Q1 Got it back, and we finished the year . . . high.”

The lender paid out 3.75 billion euros to investors in 2021 in the form of dividends and share buybacks.

UniCredit said it expected to post a net profit in 2023 roughly including its Russian business, after it pulled it out of its profit target after Russia’s invasion of Ukraine last year.

It also aims to have a profit distribution target for 2023 in line with 2022.

The lender’s shares were up 7.7% as of 8.45am London time following the results.

UniCredit has failed to extricate itself from Russia where it owns the top 15 lenders.

The bank said its core capital increased to 16% in the fourth quarter from 15.41% at the end of September.

Taking into account its most recent distribution plans, which are subject to shareholder approval and, for the buyback portion, supervisory approval, pro-forma core capital stood at 14.9%, which is still well above its target of 12.5-13.0%.

UniCredit said income from its core lending activity jumped 38% from the previous quarter and 43% from a year earlier, as tighter monetary policy widened the gap between what banks charge on loans and the rates they charge to raise funds. pay for.

This brought total quarterly revenue to 5.72 billion euros, which exceeded the median forecast of 5.12 billion euros.

The bank announced a transformation plan for late 2021 – called Unicredit Unlocked.

“With regard to conversion, we are not there yet. The results prove that the bank has converted, but what has really changed is the commercial machine coming back to life,” Orcel told CNBC.

“…the operational machine takes longer. …It is quite good to see that the commercial machine is hitting the bank while the rest have had time to converge.”

— CNBC contributed to this report.

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