UniCredit has reported extraordinary financial results for 2024, marking another landmark achievement for the bank. CEO Andrea Orcel declared the company's net income for the year reached 9.7 billion euros—its highest accounting profit ever—reflecting a modest increase of 2.2 percent from the previous year. Overall, the net profit, not accounting for deferred tax assets, rose to 9.3 billion euros, showing an impressive 8.1 percent growth.
Orcel pointed out the underlying net profit stood at approximately 10.3 billion euros, even after factoring in extraordinary expenses amounting to 1.3 billion euros, derived from integration costs aimed at enhancing future profitability. This financial success is attributed to several factors, including higher net revenues and the bank's efficient cost management strategies.
"Our results reflect our strategic focus and operational efficiencies, with the RoTE reaching 17.7 percent for the fourth quarter, or 20.9 percent on a CET1 ratio of 13 percent," Orcel stated, highlighting the bank's commitment to maintaining high capital efficiency and impressive client service.
Looking at broader performance metrics, UniCredit achieved 24.2 billion euros (+4%) in net revenues. A significant driver was the surge in commissions, which totaled 8.1 billion euros, up by 8 percent. The fourth quarter alone reported net revenues of 5.6 billion euros, contributing to these remarkable figures. The interest margin also climbed by 3 percent, reaching 14.4 billion euros.
Orcel elaborated on the cost front, noting, "Despite inflationary pressures and strategic investments, we managed to reduce costs by 1 percent to 9.4 billion euros.” Consequently, the cost-to-income ratio positioned the bank among the best-performing entities within the industry, standing at 37.9 percent.
This strong performance has positioned UniCredit favorably for shareholder distributions. For the fiscal year 2024, the bank has planned total distributions of 9 billion euros, including 3.7 billion euros allocated for dividends. This translates to 2.40 euros per share, marking a remarkable 33 percent increase from the prior year.
The CEO announced intentions to increase shareholder distributions to 9 billion euros for 2024, which is subject to regulatory approvals and signifies the bank’s dedication to rewarding its shareholders. "We are increasing the dividend to 50 percent of net profit starting from 2025," Orcel emphasized, showcasing UniCredit's proactive distribution strategy.
Beyond addressing current performance, UniCredit’s leadership maintains forward-looking projections. For 2025, the bank has guided net profits to remain relatively stable compared to 2024, forecasting net revenues to exceed 23 billion euros. Orcel stressed the need for caution, commenting, "We are prepared for challenges as we anticipate some moderations due to lower interest rates and other economic pressures."
Starting with 2027, UniCredit aims to achieve approximately 10 billion euros in net profit, with sustained RoTE above 17 percent. Orcel confidently addressed forecasts, stating, "Our guidance reflects our confidence, having surpassed all previous financial targets set during the initiation of our strategic plan, UniCredit Unlocked."
Despite the setting of ambitious benchmarks, Orcel pointed out significant challenges lie ahead, including potential market volatility due to geopolitical uncertainties. "The macroeconomic and geopolitical environment remains complicated and unpredictable. We are, nonetheless, exceptionally well-positioned to absorb fluctuations related to interest rates and inflation," he mentioned, assuring stakeholders of the bank's resilience.
The bank is also focused on enhancing its sustainability through ESG initiatives, reporting a 25 percent increase in financing for sustainable projects. The commitment to fostering innovation is evident as UniCredit continues investing heavily in digitalization to improve customer experiences.
Despite recent successes, the stock market reflects some skepticism, with UniCredit’s shares experiencing slight declines following the announcement of results. Market reactions hinted at investor concerns toward future growth trajectories rather than the impressive past performances.
Overall, UniCredit’s record breaking financial year is not merely about the present; it's about setting the stage for sustainable, profitable growth and reinforcing its role as a major player within the European banking sector.