UniCredit Reports Solid Fourth-Quarter 2021 Results; Modest 2022 Guidance

No-moat UniCredit reported a net loss of EUR 1.4 billion for fourth-quarter 2021, compared with a EUR 1.1 billion net loss for fourth-quarter 2020. The result was distorted by some items UniCredit believes to be nonrecurring. On an underlying basis UniCredit reported a EUR 1.3 billion net profit compared with EUR 0.2 billion a year ago. A nonrecurring gain supported revenue growth of 5% year on year, including robust growth in fee income of 12%. UniCredit will be very pleased with the fee income result as it is in line with its newly unveiled strategy. Expenses were flat year on year and sequentially, another pleasing outcome in an inflationary environment. Loan-loss provisions came in 61% lower than a year earlier but increased by almost fourfold compared with third-quarter 2021. UniCredit attributed the higher provisions to seasonality and regulatory headwinds. UniCredit’s 2022 guidance of flat net interest income, a slight increase in fee income, flat cost growth and stable loan-loss provisions points to upper-single-digit net profit growth, according to our estimates.