unicredit, record earnings – The news on dividend stocks

MILAN. Analysts were expecting profits of 4.9 billion, Andrea Orcel pushed the Unicredit accelerator – excluding Russia – up to 5.2 billion, a jump of 47.7%. Profits that in the accounting data reach 6.5 billion, against 2.1 in 2021 and 5.3 expected by the market. «Our best result in over a decade», sums up the CEO. A surprise driven by the eighth consecutive quarter of growth (with accounts in great shape, from 1.4 billion profits, again excluding Moscow) and which opens up new prospects of remuneration for shareholders: between coupons and buybacks of treasury shares, for them 5.25 billion will go, i.e. 1.5 billion more than a year ago, +40%. This is a cash dividend of 1.91 billion and a buyback of 3.34 billion. Of these, a first tranche of 2.34 billion to be launched following the meeting of 31 March, another billion in the second half of the year.

Enough, in short, to unleash purchases on the Stock Exchange from the early morning, when the stock fails even to make a price and then enter into negotiations between important volumes (66 million shares changed hands) to close with an increase of 12, 29%, at 17.88 euros: the highest in the last 5 years. “Unicredit has achieved a series of exceptional financial results,” comments the banker. Who in an interview with CNBC adds that he has “reached and surpassed” the goals “of 2022 and most of those of 2024. The challenge for 2023 is to build on this and do better”.

Orcel explains that he is “firmly” focused “on the execution” of the plan and that he looks to the future “with confidence”. For him it is not (yet) the time for acquisitions. In this regard, all eyes are on Monte dei Paschi di Siena, which in turn rises on the Stock Exchange by 5.6% for this but also because Consob has removed its obligation to provide monthly information due to previous uncertainties about the company’s continuity. Orcel doesn’t close but, at least, takes his time: «If the conditions exist in the very distant future, we’ll see. I’m not here today,” he says.

After all, according to the banker, “our plan generates more value than any” merger. In any case, he points out to the analysts who are pressing him, any merger “must not impact on our strategy, on the distribution to shareholders and must have an industrial sense”. 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». For now, Orcel is focused on organic growth. He speaks of a commercial machine “come back to life” and this is reflected in the net revenues which increased by 13.3% to 18.4 billion, with a leap – favored by the increase in ECB rates – of the interest margin to 10, 7 billion (+18.6%) and commissions at 6.8 billion (+1%). Operating costs fell by 2% to 9.8 billion. Russia, assures Orcel, “doesn’t worry”. The exposure was reduced during the year, «at minimal costs», by a total of around 66%, or around 4.1 billion. The reduction of risk “will continue this year and in the coming ones”.

All the more in light of the results, accompanied by capital solidity which sees the accounting Cet1 reaching 16% (14.91% pro forma), according to Orcel, the stock is undervalued on the Stock Exchange. «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». Estimates for 2023 see profits and remuneration for members in line with this year. Prospects that induce old acquaintances to return to capital, such as Edoardo Mercadante’s Parvus fund, back above 5%. —