Deal, no deal? Anyway, UniCredit delivers
Despite moving on Commerzbank, internalising its Insurance JV and being in the spotlight for the whole third quarter, UniCredit posted strong results, beat expectations and raised guidance. NII was flat driven by resilience in key geographies while fees grew 10% YoY on a persistently buoyant trend. Costs were entirely flat QoQ and even down YoY, evidence of the bank''s containment efforts. With low provisions driven by some releases, net income was a 10% beat. Volumes were again weak, although perhaps more stable than expected in an arguably difficult quarter. We think CET1 ratio at 16.1% was a key strength, only down 8 bps QoQ despite strategic investments. UniCredit managed RWAs notably through securitisations, displaying once again the bank''s sensible use of available tools to continue to outperform.
Higher guidance and protected distributions. The rest is for later
As part of today''s results, UniCredit increased its 2024 revenues guidance to EUR24bn (from EUR23.5bn) and net profit to EUR9bn post any action. Management also flagged a resilient NII outlook despite lower rates expectations - namely a small decline despite an average Euribor 3M of c.2.25% next year. Fees growth was placed as a solid offset to keep revenues stable, while costs and provisions will remain contained. Regarding distributions, UniCredit advocated they would be protected in case of an acquisition - post any stabilization period (c.1 year). On the use of the 21% stake in Commerzbank, UniCredit will likely take a decision within a year - a longer horizon than widely envisioned previously, highlighting the bank''s confidence in the attractiveness of a tie-up with the German bank for all stakeholders.
Upside in most scenarios, maintain O/P and Top pick with new EUR57 TP (from EUR54)
The stronger capital generation in the quarter and the better capital dynamics expected alongside the fine tuning of estimates lead to our new target price at...
