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Bloomberg
UniCredit SpA posted second-quarter profit that almost doubled analyst expectations, prompting the lender to lift its full-year target in anticipation of further gains from rising
interest rates in Europe.
Net income was 2 billion euros ($2 billion), compared with the 1.02 billion euros estimated by analysts. Above-expectation revenues, the absence of fresh loan-loss provisions, and the performance of the bank’s Russia subsidiary, boosted the result. The full-year adjusted profit target
excluding Russia now stands at
4 billion euros, up from 3.3
billion euros previously.
With businesses across the region including Germany and the home market of Italy, UniCredit is poised to benefit from the European Central Bank’s response to surging inflation. Chief Executive Officer Andrea Orcel has also hedged his bets on Russia by holding off for now on the full-scale exit that rival Societe Generale SA has started, earning revenues while reducing the size of that
business.
“On the back of our excellent performance and a more supportive interest rate environment we have improved our 2022 guidance,†Chief Executive Officer Andrea Orcel said in the statement.
UniCredit shares rose as much as 6.8% after the open, and traded at 9.14 euros at 9:10 a.m. in Milan.
Since taking the helm of Milan-based UniCredit last year, Orcel has exited businesses and cut jobs in non-core locations such as New York and Tokyo, shifting to more lucrative products and capital-light activities. The CEO has buoyed investors by rolling out one of the most generous shareholder payouts in Europe worth at least 16 billion euros through 2024.
The bank said it intends to go ahead with a remaining 1 billion-euro share buyback on 2021 earnings, and has submitted a request for ECB authorization. It plans to call an extraordinary meeting in the third quarter to seek shareholders approval.