📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

UniCredit soars after record 4Q

Published 01/31/2023, 03:28 AM
Updated 01/31/2023, 04:41 AM
© Reuters.

By Geoffrey Smith 

Investing.com -- Shares in UniCredit (BIT:CRDI) surged on Tuesday to their highest in nearly five years, after the Italian-based bank announced record revenue and profit in the fourth quarter thanks to the end of negative interest rates in the Eurozone. 

UniCredit said revenue grew 20% from the third quarter and was up 25% from a year earlier at €5.34 billion (€1=$1.0890), with net interest income rising over 40% to €3.20B. That came against the backdrop of three sharp rises in the European Central Bank’s official interest rates in the second half of the year that allowed it to charge more for its loans and vastly improved the returns on its excess cash.

The group also reduced its operating costs by 2% on the year “despite extraordinary inflationary headwinds”, bringing its cost-income ratio – a key measure of efficiency – down by a whopping 7.5 percentage points from 2021’s level to 47.5%.

As a consequence, net profit more than tripled last year to €6.46B. That bolstered the bank’s core tier 1 capital ratio to 16%, allowing it to pay out a total of €5.25B in dividends and buybacks, pending regulatory and shareholder approvals.

The group said it expects a similar net profit in 2023, a year when it is likely to face more pressure from bad loans. Massive government subsidies introduced after Russia’s invasion of Ukraine shielded its corporate and retail clients in its two largest markets, Italy and Germany, from the effect of surging energy prices last year, but the governments of both countries have signaled it will be hard to keep up that degree of support.

Non-performing loans actually fell as a proportion of the overall loan book in the quarter. At the end of the year, they stood at 2.6% of overall exposures, down 20 basis points from September and down 120 basis points from a year earlier.

By 04:35 ET (09:35 GMT), UniCredit stock was up 7.7%, the best-performing stock in the FTSE MIB index, which was down 0.3% overall. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.