UniCredit (UCG.MI) projected a promising outcome for 2024 after reporting an 8% rise in earnings for the three months ended September 30, marking the 15th consecutive quarter of profitable growth. For the full year, the Italian banking group revised its net profit guidance upward to over 9 billion euros from over 8.5 billion euros.
Excluding significantly higher investments, the net profit outlook stands at 10 billion euros. Robust revenues during the first nine months have also led UniCredit to enhance its net revenue forecast to 24 billion euros from over 23 billion euros. The lender aims to achieve a net profit exceeding 9 billion euros annually for 2025 and 2026. The growth potential is fueled by an increase in third-quarter revenue, climbing year-over-year to 6.14 billion euros from 5.97 billion euros, supported by stable net interest income, increased fees from client activity, and loan loss provisions.
This, combined with reduced operational costs, propelled the profit attributable to the group from 2.32 billion euros to 2.51 billion euros. With an organic capital generation of 3.5 billion euros—setting another quarterly record—the board announced an interim cash dividend of 0.9261 euro per share, ahead of a plan to boost shareholder distributions in 2025 and 2026.
UniCredit will maintain distributions in 2024 on par with the previous year, proposing to raise the cash dividend payout ratio from 40% to 50% starting in 2025. Regarding the company’s strategy to acquire up to 29.9% of Commerzbank ($CBK), Chief Executive Officer Andrea Orcel remarked that this planned strategic investment in its German counterpart may or may not culminate in a full combination.
UniCredit may consider selling its 21% stake in Commerzbank if the potential for unlocking intrinsic value isn’t viable as an investor or in a full merger. "This aligns with our disciplined approach to inorganic options, adhering to stringent financial criteria while providing us with future optionality.
However, our immediate priority continues to focus on consolidating our sector leadership and fulfilling our organic ambitions," Orcel remarked. Shares experienced a slight decline during mid-morning trading..