UniCredit reports stronger-than-expected Q4 earnings
By Josh White
Date: Wednesday 12 Feb 2025
(Sharecast News) - UniCredit reported stronger-than-expected fourth-quarter earnings on Tuesday, allowing the Italian bank to raise shareholder returns even as it prepared for a slight revenue decline in 2025.
Net profit for the quarter reached €1.97bn, exceeding analyst estimates of €1.8bn, while revenue came in at €6bn, also ahead of forecasts.
The bank announced a €9bn shareholder distribution for 2024, including a €3.7bn cash dividend, surpassing its earlier guidance.
It also raised its dividend payout target to 50% of net profit in 2025, up from 40% in 2024.
Despite the returns, UniCredit said it expected 2025 revenue to decline to above €23bn, down from €24.8bn last year, as net interest income moderated with lower eurozone interest rates and the continued reduction of its Russian business.
CEO Andrea Orcel said the bank was entering the next phase of its strategy, aiming to accelerate growth while maintaining strong financial discipline.
UniCredit was projecting a return on tangible equity above 17% through 2027, with a long-term profit target of €10bn that year.
Orcel's leadership had positioned UniCredit at the center of European banking consolidation, with the lender pursuing deals in both Italy and Germany, including an unsolicited bid for Banco BPM and the acquisition of a 28% stake in Commerzbank.
A recent 4.1% stake in insurer Generali had also drawn attention, although UniCredit denied any strategic interest in the move.
The bank had said that any mergers or acquisitions would need to meet its strict financial and strategic criteria.
Despite the earnings beat, UniCredit shares were in the red on Tuesday morning after separate reports that Delfin, the holding company of the Del Vecchio family, could consider selling its 2.7% stake in the bank.
UniCredit was continuing to benefit from a strong capital position, with a CET1 ratio of 15.9%, and had committed to increasing investor distributions while selectively pursuing external growth opportunities.
However, the bank was facing headwinds from falling interest rates and regulatory pressure to exit its Russian operations, which could weigh on future earnings.
At 1021 CET (0921 GMT), shares in UniCredit were down 3.39% in Milan at €45.63.
Reporting by Josh White for Sharecast.com.
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