UniCredit lifts profit guidance, leaving behind the 'drag' of its Banco BPM bid

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The Commerzbank AG headquarters, successful the fiscal territory of Frankfurt, Germany, connected Thursday, Sept. 12, 2024.

Emanuele Cremaschi | Getty Images News | Getty Images

UniCredit connected Wednesday posted a crisp second-quarter nett hike and lifted its full-year guidance, a time aft withdrawing its takeover bid for Italian adjacent Banco BPM amid absorption from Rome.

Italy's second-largest slope reported a 25% year-on-year hike successful nett net to 3.3 cardinal euros ($3.87 billion) successful the 2nd 4th erstwhile including one-off items, and 2.9 cardinal euros without them. Net revenues dipped 4.7% year-on-year to 6 cardinal euros successful the July quarters.

Speaking to CNBC's Silvia Amaro connected Wednesday, UniCredit CEO Andrea Orcel said the downswing successful nett revenues contempt the nett uptick was the effect of consolidating its stock involvement successful German lender Commerzbank, among different items.

Other second-quarter highlights included:

  • Return connected tangible equity deed 24.1%, compared with 22% successful the archetypal quarter.
  • CET 1 superior ratio, a measurement of slope solvency, was 16.2%, versus 16.1% successful the March quarter.
  • Net involvement income — the quality betwixt revenues made connected loans and involvement paid connected deposits — dipped to 3.5 cardinal euros, down conscionable 0.3% from the January-March stretch.

UniCredit said it present expects full-year nett net to deed 10.5 cardinal euros, compared with previous guidance astatine 9.3 cardinal euros issued successful the archetypal quarter. It further anticipates it shareholder distributions volition scope 9.5 cardinal euros implicit the full-year stretch, of which astatine slightest 4.75 cardinal euros volition beryllium successful currency dividends.

The bank's results travel a time aft it announced it was withdrawing its bid to get Banco BPM, whose connection play was owed to people expire connected Wednesday. UniCredit said the takeover effort was impacted by the Italian government's workout of its "golden power" rules, which alteration Rome to intercede successful transactions believed to interaction nationalist information — and which Giorgia Meloni's authorities exercised to enforce a spate of conditions to wide the transactions.

This "prevented UniCredit from engaging with BPM's shareholders arsenic a mean connection process would person allowed," UniCredit said Tuesday.

 The squad  successful  Italy is generating successful  1  4th   the aforesaid  nett  net  that BPM generates successful  a year

Italian and European regulators person antecedently championed for UniCredit to retreat from Russia, which remains nether wide-spanning sanctions since its full-scale penetration of Ukraine. UniCredit CEO Andrea Orcel had signaled helium could fto the connection expire, noting the opacity of Rome's requirements could some trim the deal's entreaty and exposure the Italian lender to penalties nearing 20 cardinal euros. 

"The archetypal happening I punctual everybody [is] arsenic the CEO of this bank, I'm not asked to bash M&A, I'm asked to make value. I'm asked to fortify the slope and marque it bulletproof for the future. M&A tin oregon cannot beryllium a instrumentality to bash that," Orcel told CNBC connected Wednesday.

"We've drawn a enactment nether this [Banco BPM] transaction. To beryllium honest, it had go a resistance connected us. We consciousness we were accelerating mode further than they were, and the worth had shifted," the UniCredit brag added. "But astir importantly, fixed the concern connected 'golden power[s],' determination was nary different spot to go. And astatine immoderate constituent you request to chopped your losses, destruct your resistance and absorption connected what you control. We power the aboriginal successful Italy, and we power it successful the group, we're moving on, that's it."

The European Union has progressively turned its oculus to authorities obstruction of banking mergers nether its umbrella, challenging the usage of Rome's "golden powers" for lender acquisitions and criticizing Spain implicit its involution successful Banco Bilbao Vizcaya Argentaria's bid for Sabadell, according to media reports.

UniCredit stepped to the forefront of a M&A fever that has progressively swept up the European banking sector, aft making 2 abstracted overtures since the extremity of past year. While its Banco BPM bid has present been near behind, the lender inactive has entree to astir 28% of Commerzbank's shares done fiscal instruments – of which 20% person been converted to equity. The German authorities besides opposes this takeover.

Orcel connected Wednesday said UniCredit is present "rooting for the occurrence of Commerce Bank, due to the fact that their occurrence is our success."

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