UniCredit boosts profit, payout targets after record quarter

BLOOMBERG 

UniCredit SpA raised its full-year profit target and said it will boost shareholder payouts, after a surge in lending revenue helped the bank post its best-ever first-quarter.
The Milan-based bank expects adjusted profit this year above €6.5 billion ($7.2 billion) and investor returns about €500 million higher, according to a statement. Key performance metrics for the period — including net income — were all better than expected.
Since taking charge at Italy’s second-biggest bank almost two years ago, Chief Executive Officer (CEO) Andrea Orcel has trimmed costs and shifted focus to better performing businesses, and is now catching the tailwind of higher European Central Bank (ECB) rates. UniCredit is sweetening a buyback and dividend strategy that’s already one of the region’s most generous, even as turbulence in the banking sector persists.
“The improved macro-outlook and rate environment, positive business trends and our continuing transformation and strengthened lines of defense have enabled us to increase our 2023 guidance,” Orcel said in the statement.
Among the bright spots of the earnings was revenue rising 18% from a year earlier and net interest income jumping 44% from the same period in 2022.
“UniCredit has reported a stronger than expected net profit, better than expected capital generation and more resilient balance sheet,” Azzurra Guelfi an analyst at Citigroup Inc, wrote in a report.
While retail deposits at Italian banks declined 3.6% in the quarter, UniCredit’s deposits from customers increased by 2.4% in the period. Still, the average commercial deposits of the Milan-based lender were down 1.6% to €479.4 billion.