The season of bank accounts in Italy is off to a flying start with Unicredit which this morning released its fourth-quarter and full-year 2022 results showing revenues and profits above analysts' estimates. It is, emphasizes the bank of “record results in the fourth quarter”, as well as the “best full year results of the decade”.
“Unicredit has achieved a series doutstanding financial results that demonstrate significant progress in the industrial transformation journey and the ability to achieve excellent performance throughout the cycle,” he points out the CEO, Andrea Orcel, highlighting that the one recorded in 2022 “is our best result in over a decade. We are firmly focused on the execution of Unicredit Unlocked and we look to the future with confidence”, adds the manager.
Record earnings for Unicredit
For the bank in Piazza Gae Aulenti, 2022 ended with a net profit of 5,2 billion euros, a result that beats the expectations of analysts who expected profits of 5,13 billion. Compared to 2021, the increase is 64% to 5,4 billion excluding Russia, +47,7% considering Moscow. L'accounting profit for the full year, on the other hand, it amounts to 6,5 billion euros and includes, among other things, the release of DTAs in Austria and Italy for 852 million in the fourth quarter. Turning to fourth quarter, net profit reached 1,4 billion euros, a result that compares with the loss of the same amount recorded in the last three months of 2021 due to one-off extraordinary items. The quarterly accounting profit is instead 2,4 billion.
Unicredit: revenues exceed 18 billion
The increase in interest rates and the "strong commercial momentum" are inflating the revenues of Unicredit, which closes 2022 with a record growth in revenue, excluding Russia. Looking at the figures, in fact, in the fourth quarter net revenues amounted to 4,6 billion euros (+34,9%), while for the whole of 2022 they reached 18,1 billion, with an increase of 14,7% year on year (18,4 billion, +13,3% considering Russia). "The result - Unicredit says in a note - reflects the high risk-adjusted profitability, with the achievement of objectives in all key levers and in all businesses, supported by the significant growth in net interest income in the fourth quarter of 2022, up nearly 41 percent year-over-year and up 42,5 percent quarter-over-quarter, to $3,2 billion. In 2022 the interest margin grew by 16%, reaching 9,9 billion. contained them credit adjustments, amounting to $0,6 billion in the fourth quarter, decreased by 17,8 percent year-on-year in the quarter.
I operating costs they fell by 2% to 9,8 billion for a cost/income ratio decreased to 47% (48,6% excluding Russia). In terms of capital solidity, the Cet1 it is 16% and 14,91% pro forma.
“Double-digit year-over-year growth in net revenues was supported by positive business momentum, a favorable interest rate environment, cost reductions notwithstanding investment for the future, and despite unprecedented inflation , and a consistently low cost of risk,” summarizes Orcel.
Unicredit: dividend and maxi buyback, 5,25 billion to shareholders
“We mean distribute 5,25 billion euros combined between dividends and share buybacks for 2022, an increase of €1,5 billion year-on-year, or more than 80 per cent increase in DPS, subject to appropriate approvals. We are fulfilling our commitment to shareholders of a sustainable and attractive distribution policy, while maintaining our capital strength”; announced CEO Andrea Orcel. In detail, the proposal of dividend is equal to 1,91 billion, all in cash. The group intends to proceed with the buyback of own shares approximately €3,34 billion, subject to regulatory and shareholder approval. The bank aims to carry out the buyback in two tranches, the first equal to approximately 2,34 billion, to be launched immediately after the approval by the ordinary shareholders' meeting scheduled for 31 March next, while the second, equal to approximately 1 billion, is expected during the second half of 2023 following the completion of the first tranche.
CEO Andrea Orcel, in the call with news agencies following the publication of the results, said the Italian bank had held "extensive discussions on distribution with the regulator" and was "confident that we will get the clearance to execute it” by the ECB.
Russia updates
Unicredit's cross border exposure to Russia was reduced overall by approximately 66% during the year, i.e. by approximately 4,1 billion "thanks to proactive and disciplined actions", underlines Unicredit which says it is "committed to maintaining a progressive derisking approach".
Our Customers substantially reduced the risk and we feel that Russia will not be a substantial volatility factor or capable of overshadowing our results going forward,” Orcel said. “Results in Russia will be reported separately each quarter and that doesn't mean we won't continue the derisking process,” he added.
Guidance for 2023
In 2023 Unicredit expects a Net income “substantially in line with 2022”. THE Net revenues more than 18,5 billion is expected, with an interest margin of more than 11,3 billion and costs of less than 9,7 billion. The cost of risk is expected to be between 30 and 35 basis points. Furthermore, Unicredit "sets as its objective a distribution 'to shareholders' for 2023 substantially in line with that of 2022".
Orcel on M&A and Mps
Responding to a question about M&A, the CEO recalled that since he arrived he has always said that "M&A is a tool, not a goal or a strategy”. “Any M&A deal would have put pressure on the execution of the plan – he explained – But considering it as a tool we will do M&A under certain conditions: the acquired company must have a strategic fit and be accretive to our performance and distribution”.
Speaking instead of Mps, Orcel reiterated that he was happy to see that the transformation is bearing fruit and that the Sienese bank is getting stronger. As regards the direct involvement of Unicredit he said: “If in a very distant future there were conditions, we'll see. I'm not here today."
