Italy’s UniCredit beats profit estimate as it continues takeover drive

UniCredit announced on Tuesday a stated net profit of €1.97 billion in the final three months of last year, bringing annual net profit to around €9.71 billion.

The yearly total is up 2.2% while the quarterly result represents a 29.9% year-on-year drop, a smaller decline that analysts had predicted.

Revenue, meanwhile, came in at just over €6bn in the fourth quarter, a 0.7% annual rise, and €24.84bn over the year.

Full year return on tangible equity (RoTe) was recorded at 11.5% in the fourth quarter and at 17.7% over the year.

UniCredit said its operating costs came in at €2.51bn in the final three months of the year, a 1.3% yearly jump.

Also in the earnings statement, the Italian bank announced that it would boost shareholder returns in 2025, pledging a cash dividend pay-out at 50% of net profit, up from 40% in 2024.

On last year’s earnings, UniCredit said it would return €9bn to investors, €1.44 billion of which was already paid out as interim dividend in November 2024.

Looking ahead, the bank hopes to raise a net profit of €10bn in 2027.

It’s also targeting a RoTE performance above 17% in the period from 2025 to 2027, compared with last year’s 17.7%.

The bank nonetheless warned that it expects a modest decline in revenue in the coming year due to lower interest rates and the “further compression” of its business in Russia.

“Three years ago we announced UniCredit Unlocked with financial goals that many said were too ambitious. We have now overdelivered on all those goals, outperforming on all metrics including profitability and distribution targets, and are entering the next phase of our strategy,” CEO, Andrea Orcel, said in the earnings statement.

“In this phase, we will accelerate our growth, aspiring to further widen the gap with our competitors, close our valuation gap, and cementing UniCredit as the bank of Europe’s future and benchmark for banking,” he added.

UniCredit’s announcement comes as the bank is seeking to consolidate with other European competitors.

The bank is notably seeking to take over domestic rival Banco BPM and Germany’s Commerzbank, although both bids remain hostile.

The Banco BPM CEO warned last year that a takeover could cost over 6,000 jobs, while unions in Germany have expressed concerns that a merger with Commerzbank could lead to job cuts and hinder lending to SMEs.