Italy’s second-largest lender UniCredit on Tuesday posted a fourth-quarter profit beat, but guided a slight slowdown in 2025 revenues amid expected declines in net interest income.
Net profit attributable to the group came in at 1.969 billion euros ($2.03 billion) in the fourth quarter, compared with an analyst forecast of 1.803 billion euros, according to a LSEG-compiled consensus.
Revenues reached 6 billion euros over the period, versus analyst expectations of 5.898 billion euros.
Other fourth-quarter highlights included:
- Return on tangible equity of 11.5%, compared with 19.7% in the third quarter.
- CET 1 capital ratio, a measure of bank solvency, was 15.9% from 16.1% in the previous three-month stretch.
- Operating costs of 2.5 billion euros, up 9.5% quarter-on-quarter.
The lender, whose full-year net profit added an annual 8.1% to 9.31 billion euros, pledged bolstered shareholder returns in 2025, upping its cash dividend pay-out guidance to 50% of net profit, from 40% in 2024. UniCredit also said it targets a RoTE performance above 17% over 2025-27, compared with the 17.7% of 2024.
In a statement accompanying the results, CEO Andrea Orcel said UniCredit was progressing onto the next phase of its strategy and will accelerate its “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.”
Despite this, the bank guided for full-year revenues of above 23 billion euros in 2025, below the 24.8 billion euros achieved last year, reflecting the “further compression” of UniCredit’s business in Russia and “moderate decline” in expected net interest income, or the difference between lender earnings on loans and costs on deposits. The European Central Bank has been calling on UniCredit to pare down its Russian operations following the war in Ukraine.
Amid these downside pressures, UniCredit says it expects full-year 2025 fees to be up a “mid-single digit percentage point” compared with the previous year, in a projection that includes the net insurance result. Shares were last trading down 3%. European banks have been faced with the challenge of acclimating to an environment of declining interest rates, as the European Central Bank continues its cycle of monetary easing.
“We’ve laid the foundation to be able to address the normalization of rates, the normalization of cost, of risk and inflation on cost. So the golden money for banks is considered to be declining into a normalization of the situation. And our ambition is to absorb all that normalization and growth,” Orcel told CNBC’s Silvia Amaro on Tuesday. “And we are quite confident. I think we have lines of defense. We are strong.”
M&A scope
UniCredit has been at the epicenter of Italy’s nascent push for consolidation since the second half of last year, following its surprise build — and later increase — of a stake in Germany’s Commerzbank, and its takeover offer for domestic peer Banco BPM at the end of 2024. The Italian lender has so far rejected UniCredit’s opening play, but Orcel told Bloomberg his opening bid for Banco BPM was only a “fair starting point.”
Speaking to CNBC’s Amaro on Tuesday, the UniCredit boss added that it was imperative to first see how Banco BPM responds to rate normalization, cost of risks and inflation on cost developments, at least up to the first quarter, before reassessing the offer.
“In order for us to review, there needs to be a significant shift that makes whatever increase match our metrics of profitability for our shareholders, or we will not do it,” he said, while noting that Banco BPM matches the Small and Medium-size Enterprise (SME) and affluent client segment that UniCredit currently wishes to target.
He separately stressed that Commerzbank remains an investment for UniCredit, but adds that the Italian bank will review its options once the German government completes its elections at the end of this month.
“I’m quite optimistic of being able to convince everybody, not only on the premises of how we got to this investment, but also that a combination between the two bank has massive value to be created, not only for the two banks and the stakeholders, but also for Germany and for Europe,” Orcel said.
The German administration has decried UniCredit’s “very aggressive, very opaque, untransparent” bid for Commerzbank, with Rome likewise resistant on the domestic front, amid broader government plans to form a third Italian banking titan alongside Intesa Saopaolo and UniCredit. Complicating the landscape of Italian dealmaking, UniCredit on Feb. 2 unveiled a 4.1% stake build in Italy’s top insurer Generali Group, but has stressed that “no strategic interest” motivates the venture.
Critically, Italy operates under so-called golden powers legislation which permits Rome to intercede or set conditions on foreign and domestic corporate takeovers in key sectors such as defense, energy, communications and banking.
Market participants are watching which of its twin-pronged suits UniCredit will commit to, or whether it will ambitiously keep both targets in sight.
“Any inorganic growth must improve our standalone case and meet our strict financial and strategic requirements,” Orcel said in the Tuesday statement.