UniCredit, based in Milan, announced on Tuesday that their 2024 earnings surpassed expectations, and they are committed to maintaining stable profits this year despite declining interest rates. The company plans to increase rewards for investors between 2025 and 2027 unless other opportunities arise.
With the leadership of CEO Andrea Orcel, UniCredit is aggressively expanding, recently acquiring a smaller domestic peer, Banco BPM. Additionally, they made a strategic investment in Generali, Italy's largest insurer, positioning the bank well for future takeover and boardroom activities in the Italian financial sector.
UniCredit aims to pursue external growth opportunities that align with their strategic and financial criteria. Orcel has built up a substantial cash reserve exceeding targeted capital requirements by focusing on capital-light activities.
The bank intends to return 6.5 billion euros to shareholders by 2027, in addition to regular dividends, subject to any potential acquisitions. Shareholders are expected to receive 9 billion euros in share buybacks and dividends from the bank's 2024 profits. Analysts have positively assessed UniCredit’s financial performance, with JPMorgan noting payouts exceeded predictions and KBW recognizing the favorable management outlook.
Despite a recent share price decline of 3.4%, UniCredit is well-positioned for potential merger opportunities due to its notable share price increase under Orcel's leadership. The bank anticipates a moderate decrease in net interest income in 2025 due to lower euro zone rates and strategic adjustments in its Russian operations.
UniCredit also faces pressure from the ECB to expedite its departure from Russia. While projecting a modest increase in fees in 2025, the bank expects a slight decrease in net revenues to above 23 billion euros from 24.2 billion last year.
In the October-December period, UniCredit posted a profit of 1.97 billion euros, surpassing estimates despite increased provisions for loan losses. The company's performance in earnings signifies a shift towards a new strategic direction under Orcel's leadership.