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Unicredit Reports Upbeat 2023 Profits, Gives Similar Forecast for 2024 LeapRate

UniCredit (CRDI.MI) surprised the financial markets on Monday by announcing a significantly higher-than-expected profit for 2023, which it intends to distribute to its shareholders. Despite a more challenging economic environment, the bank also committed to achieving a similar profit level in the current year.

The announcement led to a 10% surge in the share price of Italy’s second-largest bank, reaching a nine-year peak. It was fueled by its strong earnings performance and a positive outlook in a year when interest rates are anticipated to begin falling.

While other major European banks adopted a more reserved stance in their full-year earnings reports last week, UniCredit expressed a more positive outlook. “We face the future with optimism,” stated CEO Andrea Orcel during an analyst call. Since Orcel, a former investment banking chief at UBS, took over in April 2021, UniCredit’s shares have climbed nearly 250%, reaching their highest point since May 2015.

Citi analyst Azzurra Guelfi noted, “The stock is one of the most favoured in the sector, yet it continues to exceed expectations.” For the fourth quarter, the bank posted a net income of 2.8 billion euros ($3.01 billion), boosted by a 900 million euro reversal of tax assets, significantly outperforming UniCredit’s consensus forecast of 1.2 billion euros.


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Excluding the tax asset reversals, the bank’s revenue defied expectations of a downturn by increasing 4.6% year-on-year. UniCredit saw improvements in lending income and net fees over the previous quarter, contrary to analysts’ predictions for a decrease. Additionally, provisions for loan losses in the fourth quarter were substantially lower than anticipated.

The bank announced a 2023 full-year net profit of 8.6 billion euros, excluding tax asset write-ups, and plans to allocate the entire sum towards share buybacks and dividends. This exceeds its previous guidance of distributing at least 6.5 billion euros based on a net profit of 7.25 billion euros or more.

UniCredit plans to implement a 90% payout policy, increasing the cash portion to 40% of income from 35% in 2023 and introducing an interim dividend.


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