Unicredit, earnings over 5 billion in profits: the performance of the stock on the Stock Exchange

MILAN. Beyond expectations, 2022 by Unicredit. The banking group closed the accounts with a net profit of 5.2 billion, an increase of 47.7% compared to the previous year. «It is our best result in over a decade», comments the CEO Andrea Orcel. Enough to unleash purchases on the Stock Exchange, where the stock at first fails even to make a price and then enters trading, in the morning, with increases of more than 10%. “UniCredit has achieved a series of exceptional financial results – continues the banker – which demonstrate the significant progress in the industrial transformation path and the ability to obtain excellent performances throughout the cycle”. And now? “We are firmly focused on the execution of the “UniCredit Unlocked” plan and look to the future with confidence”.

The brake on M&A
This is not the time for acquisitions for Orcel. On Monte dei Paschi, regarding which new rumors of a possible involvement of the Milanese bank have recently echoed. But Orcel holds back: «If the conditions exist in the very distant future, we’ll see. I’m not here today.” After all, according to the banker “our plan generates more value than any M&A”. Counting that any merger “must not impact on our plan, on the distribution to shareholders and must have an industrial sense”. But even Orcel knows perfectly well that at some point the question will arise. “Towards the end of the plan – explains the manager – either we convince ourselves that there is no value” in the acquisitions “and therefore we will integrate our remuneration to the shareholders” by distributing the excess capital, “or, and in my opinion better, if we can execute acquisitions that add value we will do it».

The coupons
Speaking of distribution to shareholders. Unicredit expects to pay shareholders 5.25 billion between coupons and the buyback of treasury shares in 2022. This is 40% (1.5 billion) more than the previous year, with a proposed cash dividend of 1.91 billion and a share buyback of 3.34 billion, subject to the necessary approvals.

As for the accounts, excluding Russia, profit rose by 64% to 5.4 billion, against the 5.3 expected by analysts and the “over 4.8 billion” of the estimates provided by the institute. Book profit is even higher, at $6.5 billion, and includes among other things the release of DTAs (tax benefits) in Austria and Italy for $852 million in the fourth quarter. Orcel speaks of a “positive commercial momentum” and this is reflected in net revenues which increased by 13.3% to a record level of 18.4 billion, with a leap – effect of the rate hike decided by the ECB – in the interest at 10.7 billion (+18.6%) and commissions at 6.8 billion (+1%). Operating costs fell by 2% to 9.8 billion, for a cost/income ratio down to 47%. Exposure to Russia was reduced during the year, “at minimal cost”, by a total of around 66%, or around 4.1 billion.

Better than consensus
According to Orcel “we are still undervalued” by the market. «In the last 8 quarters we have beaten the consensus (analysts’ estimates, ed) by 30% each time. The market has not yet adjusted our price considering this. I think we will do the same this year. Provisions protect us. We expect to improve. This is a different bank from the past».