UniCredit beats Q3 forecasts, raises 2024 outlook on strong revenue growth

Investing.com — UniCredit (ETR:) on Wednesday reported strong results exceeding analyst expectations in several areas and raising its 2024 outlook. 

In its Q3 earnings, UniCredit’s pre-provision profit came in 4% above forecasts, largely due to stronger-than-expected revenues, especially in trading income and net interest income. 

Operating costs were also better than anticipated, underscoring disciplined expense management.

UniCredit has now raised its full-year guidance for 2024, reflecting confidence in its revenue streams and ability to maintain strong profitability. 

The bank lifted its net revenue target to around €24 billion, up from previous estimates of €23 billion, and increased its organic capital generation guidance to roughly 400 basis points, compared to 350 basis points previously. 

Additionally, UniCredit adjusted its net profit forecast upward to over €9 billion, citing flexibility to further secure earnings in 2025 and 2026. 

Excluding one-time costs and integration expenses, the bank’s “clean” net profit is projected to be around €10 billion. Return on tangible equity guidance also improved slightly, moving up to 17% from 16.5%.

Going ahead, the bank expects net profit of more than €9 billion in 2025, alongside strong growth in both earnings per share and dividend per share. 

Operating costs are expected to remain flat year-over-year on a comparable basis. 

As part of its strategy, UniCredit raised its cash dividend payout target to 50% of net profit, up from 40%, projecting annual shareholder distributions of over €8.6 billion for fiscal year 2024.

Key highlights from UniCredit’s Q3 performance include a steady NII of €3.56 billion, slightly above market expectations, and fees totaling €1.94 billion, reflecting a 9% year-over-year increase. 

Strong growth was observed across various segments, with investment-related income up 15%, advisory and financing up 12%, and client hedging fees surging by 34%. 

Trading income outperformed forecasts, reaching €441 million despite the investments related to Commerzbank (ETR:).

“Messages on CBK outline room for value creation in case of a combination, but also possible capital gains in case of divestment,” said analysts at Barclays (LON:) in a note.

UniCredit’s cost structure showed positive trends, with Q3 expenses totaling €2.29 billion, a slight decline both quarter-over-quarter and year-over-year. 

Loan loss provisions amounted to €165 million, and the bank’s cost of risk remained low at 15 basis points. UniCredit also reported a CET1 ratio of 16.1%, posting strong capital strength even after accounting for investment activities.

Additionally, UniCredit approved an interim cash dividend of €1.44 billion for fiscal year 2024, to be paid in November, which translates to a dividend per share of 92.61 euro cents.