Skip to Content
Global News Select

UniCredit CEO Sets New Course After Strong Quarter

--UniCredit's new CEO Andrea Orcel said M&A can be a strategic accelerator

--The Italian bank will present its new strategic plan in the second half of the year

--First-quarter net profit beat expectations, as strong trading and falling provisions offset a decline in net interest income

  By Pietro Lombardi 

UniCredit SpA's new chief executive Andrea Orcel wants to transition the bank from a period of restructuring to one of growth, which may entail M&A activity.

"As we look to the future, it will take time to re-energise and strengthen the business, moving from a period of active retrenchment to one defined by disciplined profitable growth and healthy organic capital generation," Mr. Orcel said Thursday.

Key elements of the new strategy--which will be preented in the second half of the year--will be a focus on clients, technology and a reduction of complexity, he added in a call with analysts.

"M&A is not a purpose in itself but I do see it as an accelerator and improver of our strategic outlook," he said, adding that any deals would have to be in the interest of shareholders and make sense financially and strategically.

The Italian bank can count on a solid capital position, with the core tier 1 ratio at 15.9% in March. It started the year with a strong performance, with first-quarter results well above analysts' expectations thanks to strong trading and falling provisions, which offset a decline in net interest income.

Net profit for the period was 887 million euros ($1.06 billion). This compares with a loss of EUR2.71 billion a year earlier, when results were dragged by soaring bad-loan provisions, and analysts' expectations of EUR413 million.

Revenue rose 7.1% to EUR4.69 billion, also above expectations of EUR4.28 billion. Trading income rose to EUR639 million from EUR173 million. This, coupled with a 4.3% increase in fees, offset a nearly 13% decline in net interest income.

Provisions fell roughly 87%, better than analysts had expected.

Looking at the year ahead, the bank expects underlying net profit in line with previous guidance of more than EUR3 billion. Costs should be around the levels seen in 2019, which were roughly EUR9.9 billion. However, it cut the revenue outlook, now seen at about EUR17.2 billion for the year, having previously guided for about EUR17.7 billion.

The results boosted the stock, with shares rising 5.4% in European morning trade.

The bank "reported a stronger than expected set of results, vs both us and consensus," Barclays said. It noted, among the key elements, provisioning, asset quality and expanding capital buffers.

Under previous CEO Jean Pierre Mustier, the bank underwent a deep overhaul, in which time it cut costs, disposed of bad loans worth billions of euros and sold assets.


Write to Pietro Lombardi at; @pietrolombard10


(END) Dow Jones Newswires

May 06, 2021 05:40 ET (09:40 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.