MILAN: UniCredit pledged to match its 2023 income this year despite a toughening backdrop and said it would pay out all of last year’s much higher than expected profit to shareholders.
The Italian bank reported net income in the October-December period of 2.8 billion euros, more than double a 1.2 billion euro ($1.3 billion) average analyst consensus forecast it provided.
Revenues surpassed expectations, edging up from the previous quarter and rising 4.6% year-on-year while they had been expected to weaken from the three months through September.
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Provisions against loan losses in the fourth quarter were less than half what analysts had forecast, declining by more than 40% from a year earlier.
With operating costs a touch below expectations, UniCredit booked slightly higher than foreseen one-off charges of 788 million euros, which it plans to use to offset future headwinds, for example by funding costly voluntary staff exits.
The lender said on Monday it would pay out 8.6 billion euros in share buybacks and dividends out of its 2023 earnings, which is 100% of its underlying profit.
It will then adopt a 90% payout policy, raising the cash part to 40% of income from 35% in 2023, when two thirds of the payback were in form of share buybacks, it added.
CEO Andrea Orcel, who arrived at UniCredit in April 2021 and is set to be handed a new three-year mandate in the spring, has bet on ambitious shareholder payback policies to boost the bank’s share price.
To be able to do so, the former UBS head of investment banking has focused on maximising returns in relation to the capital reserves deployed to support those activities. UniCredit’s core capital stood at 15.9% of risk weighted assets at the end of December.
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