By Pierre Bertrand
UniCredit reported its third-quarter results today, which exceeded analysts’ expectations. This is what we watched:
REVENUE: The Italian bank reported 5.97 billion euros ($6.37 billion) in revenue in the third quarter. The result was flat compared with the prior quarter but a 24% increase when compared with last year. Analysts had forecast EUR5.74 billion in quarterly revenue, according to a bank-provided consensus of analysts’ average expectations.
NET INTEREST INCOME: At EUR3.6 billion net interest income grew 2.9% compared with 2Q and rose 45% compared with last year. Analysts saw the key revenue metric amounting to EUR3.5 billion for the quarter, according to the bank-provided consensus.
NET PROFIT: UniCredit reported EUR2.32 billion in net profit for the quarter. The result was half a percentage higher than the previous quarter but a 36% increase compared with a year ago. Analysts had expected EUR1.92 billion, according to the same consensus.
WHAT WE WATCHED:
–GUIDANCE: Thanks to what UniCredit called an improved interest-rate environment, the Italian bank raised its guidance on net interest income and the resulting net revenue for 2023. The bank said it expects at least EUR13.7 billion in net interest income and revenue above EUR22.2 billion in 2023. Equita Sim analyst Andrea Lisi in a research note said that given the bank’s EUR6.7 billion in net profit for the first nine months of the year, the bank’s 2023 profit target of at least EUR7.25 billion appears conservative. For next year, the bank guided for net profit of at least EUR7.25 billion, and for at least EUR6.5 billion in shareholder distribution. The bank added that it expected a moderation in net interest income in 2024. It said that it opted out of paying the Italian government’s 2024 windfall tax, choosing instead to put EUR1.1 billion in a nondistributable reserve.
–FINANCIAL CONDITIONS: Average commercial deposits as of the end of Sept. 30 had declined 1.6% versus 2Q and fell 5.6% compared with the third quarter of last year. Average gross commercial performing loans decreased 1.3% on quarter and by 4.2% on year, respectively. Customer loans fell by 5.6% on year in the third quarter and customer deposits fell by 5.5% on year in the period. The bank finished the quarter with a 17.19% CET 1 ratio, compared with 15.41% a year prior.
Write to Pierre Bertrand at [email protected]
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