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The bank announced on Tuesday that net profit had increased by almost 48 percent to EUR 5.2 billion in 2022. Investors should benefit from this.
“We want to distribute a total of EUR 5.25 billion to our shareholders in the form of dividends and share buybacks for 2022, an increase of EUR 1.5 billion compared to the previous year,” said UniCredit CEO Andrea Orcel. The balance sheet is “rock solid”, extensive provisions have been made for the business in Russia and there is a strong capital base.
The turnaround in interest rates by the European Central Bank (ECB) in the fight against high inflation caused UniCredit’s net interest income to grow by 18.6 percent to EUR 10.7 billion in 2022. Overall, group income increased by 7.3 percent to almost EUR 9.1 billion. At the same time, the group reduced costs by 2 percent, and the return (RoTE) improved to 10.7 percent (previous year: 7.3 percent). In the fourth quarter, earnings were also boosted by a positive tax effect, meaning that the final quarter result was more than double the average analyst estimate.
In Russia, UniCredit owns one of the 15 largest banks in the country. So far, the Italians have not managed to withdraw from the country. UniCredit is determined to further reduce the risks from its involvement in Russia, the group said.
The UniCredit subsidiary in Austria also recorded strong profit growth in the previous year. For Bank Austria, the balance sheet showed a reported net profit of EUR 826 million, after EUR 121 million the year before. Without one-time effects and taking into account loss carryforwards, profits amounted to EUR 586 million, which is 13.1 percent more than in the previous year.
Sales increased by 7.7 percent to almost EUR 2 billion. Net interest income developed particularly strongly, rising by a good third to EUR 1.1 billion. However, there were declines in costs and risk provisions were also reduced to EUR 24 million, after EUR 166 million in the previous year. The expense ratio (cost-income ratio/CIR) improved from 61.1 percent in the previous year to 53.0 percent.
Orcel was satisfied with the business in Austria. According to the head of the bank, new branches could be opened due to increased demand from customers in Austria. Orcel did not want to put an exact figure on how many that could be.
For 2023, Orcel announced a profit at about the level of 2022. Among other things, he referred to the improved interest rate environment, low provisions for bad loans and cost savings. The distribution to shareholders for 2023 will be at the same level as for 2022.
UniCredit’s results caused optimism on the Milan Stock Exchange. In the course of the morning, the shares climbed by around eight percent to their highest level since May 2018 and are currently trading at plus 8.3 percent to 17.25 euros.
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