MILAN: Italy's second-biggest bank UniCredit raised its 2021 profit and revenue goals on Thursday after higher revenues and shrinking loan losses drove quarterly results above forecasts.
UniCredit, which on Sunday walked out of a deal to rescue state-owned rival Monte dei Paschi (MPS), posted a net profit of 1.06 billion euros ($1.2 billion) for July-September, above a bank-provided average analyst forecast of 838 million euros.
After hiring as its CEO in April veteran dealmaker Andrea Orcel, the former investment banking chief at UBS, UniCredit said it would present a new business plan on Dec. 9.
The investor day has been held back by the discussions with Italy's Treasury over MPS.
In entering exclusive talks in July, Orcel set strict terms, which led to negotiations collapsing when the parties could not agree on the bits of MPS that UniCredit would buy and their value - with sources pointing to a valuation gap of up to 3.5 billion euros.
UniCredit made no mention of MPS in its earnings statement and did not hold a media call, as it used to under previous CEO Jean Pierre Mustier.
UniCredit's revenues totalled 4.44 billion euros in July-September, a surprise 1.9% annual rise and also unexpectedly up 0.8% on the previous quarter, when easing COVID-19 restrictions had driven an exceptional rebound in fees.
While down from the previous quarter, fees rose 12.5% year-on-year, helped by a pick-up in payment and card services over the summer, with debt and capital markets activity also contributing.
Net interest income, UniCredit's Achilles heel amid negative interest rates, rose 3.1% from March-June, helped by one-off items but also growing volumes, especially in eastern Europe, despite ongoing competitive pressure driving down rates.
UniCredit said it now expected its 2021 underlying net profit to be above 3.7 billion euros, versus a previous forecast of more than 3 billion.
Revenues are projected at around 17.5 billion euros, from an estimate of around 17.1 billion three months ago.
"The market expected a good set of results, nevertheless we see them as positive for the stock, given the trends in core revenues and improved guidance," Citi analysts said in a note.
The bank also further reduced its forecast for loan losses this year after provisions in the quarter fell a larger-than-expected 60% from a year earlier to 297 million euros.
Under Mustier, who was ousted after clashing with the board over strategy, UniCredit had made hefty provisions against future pandemic-driven credit losses, but the extent of the damage on businesses is yet to emerge amid residual support measures in countries such as Italy.