UniCredit lifts 2023 goals after bumper quarter

Italian bank UniCredit on Wednesday raised its net profit and shareholder reward targets for the year after posting much stronger than expected quarterly results as higher rates lifted revenues.

UniCredit said it now expects a 2023 net profit of at least 7.25 billion euros ($8 billion), compared with more than 6.5 billion earlier. It plans to return at least 6.5 billion to investors through share buybacks and dividends, versus a previous goal of at least 5.75 billion.

It guided for similar profit and distribution targets in 2024.

Italy’s only bank deemed of global systemic relevance by industry supervisors said net income for April-June came in at 2.3 billion euros, well above a 1.86-billion-euro average forecast in a bank-gathered analysts’ consensus.

Revenues jumped by a quarter yearly, to 5.97 billion euros, topping analyst forecasts, boosted mainly by the gap between rates charged to lend and the still very low rates paid on deposits.

While weakening on a quarterly basis, income from fees and trading also surpassed expectations.

Taking over at UniCredit in 2021 as the bank emerged from years of restructuring, CEO Andrea Orcel has focused on maximising profits in relation to capital, so as to be able to reward investors and drive the share price higher.

The core capital ratio rose by more than half a percentage point to 16.64%% in the quarter, well above expectations in part thanks to a reduction in risk weighted assets (RWAs).

UniCredit improved its outlook for loan impairments in the year, saying cost of risk, which measures writedowns in relation to RWAs, was now seen below 25 basis points versus 30-35 earlier.