UniCredit, Italy’s second largest banking institution, recently reported a fourth-quarter profit that exceeded expectations, although it projected a slight dip in revenues for 2025. The bank anticipates this due to expected reductions in net interest income.
For the fourth quarter, the group’s net profit was reported at 1.969 billion euros ($2.03 billion), surpassing the analyst prediction of 1.803 billion euros. Additionally, revenues for the period reached 6 billion euros, which was also higher than the expected 5.898 billion euros.
Some key points from the fourth quarter include:
– An 11.5% return on tangible equity, compared to 19.7% in the third quarter.
– A CET 1 capital ratio, a bank solvency measure, of 15.9%, down from 16.1% in the previous three-month period.
– Operating costs rose to 2.5 billion euros, marking a 9.5% increase quarter-on-quarter.
UniCredit pledged to enhance shareholder returns in 2025, raising its cash dividend pay-out guidance to 50% of net profit, up from 40% in 2024. The bank aims for a RoTE performance above 17% over 2025-27, compared to 17.7% in 2024.
Andrea Orcel, CEO of UniCredit, stated that the bank is advancing onto the next phase of its strategy, with plans to accelerate its growth and outperform its competitors. However, the bank projects full-year revenues of over 23 billion euros in 2025, lower than the 24.8 billion euros achieved last year. This reflects the bank’s business contraction in Russia and a moderate decline in expected net interest income.
Despite these challenges, UniCredit expects 2025 fees to increase by a mid-single digit percentage point compared to the previous year. This projection includes the net insurance result.
UniCredit has been at the center of Italy’s consolidation push since last year, following its unexpected investment in Germany’s Commerzbank and its takeover proposal for domestic peer Banco BPM. While Commerzbank remains an investment for UniCredit, the bank plans to reassess its options once the German government’s elections conclude at the end of this month.
However, both the German and Italian governments have expressed concerns about UniCredit’s “very aggressive, very opaque, untransparent” bid for Commerzbank. Amid these complications, UniCredit recently announced a 4.1% stake in Italy’s leading insurer, Generali Group, but clarified that this investment was not motivated by strategic interest.
Finally, it’s important to note that Italy operates under the so-called golden powers legislation. This allows Rome to intervene or impose conditions on foreign and domestic corporate takeovers in crucial sectors like defense, energy, communications, and banking.
