RECORD QUARTER AND FIRST HALF SETTING THE BENCHMARK FOR EUROPEAN BANKING
14th consecutive quarter of quality profitable growth and record first half, with net profit at €2.7 billion, up 16% versus prior year, and RoTE of c. 20% validating the bank’s blue-chip credentials
Net revenue of €6.3 billion, up 6% year on year, with NII growth of 2% to €3.6 billion, and a very strong fee growth of 10% to €2.1 billion driven by all main categories
Industry leading cost-income ratio further improved to 36.3%, with continued reduction in absolute cost base while investing for the future
Superior asset quality confirmed by further reduced gross NPE ratio at 2.6% and continued low and stable cost of risk of 1 basis point, while maintaining c. €1.7 billion overlays
CET1 ratio at 16.2% underpinned by strong organic capital generation of €6.7 billion backing €5.2 billion of distribution accruals in 1H24 or 100% of Net Profit, 60% of the FY24 total distributions guidance already accrued
Excellent shareholder value creation with 1H24 EPS up 36% and Tangible Book Value per share up 20% versus prior year
Interim 2024 distribution of c. €1.4 billion dividends and c. €1.7 billion in share buy-back
Improved 2024 guidance while retaining flexibility to further secure long-term ambitions for 2025 and 2026
UniCredit reaffirms its strong ESG commitment with the launch of the “Skills for Transition” programme to promote a just and fair transition
On 23 July 2024, the Board of Directors of UniCredit S.p.A. (“UniCredit” or “the Group”) approved the Consolidated First Half Financial Report as of 30 June 2024. UniCredit has once again demonstrated its strength in the second quarter with an excellent set of financial results, proof of the significant progress that the bank has made thus far in its transformation journey, with significant value still to unlock.
Our focus on sustainable quality earnings through disciplined management of NII with RoAC only in excess of our cost of equity and increased fee growth, together with continued operational and capital excellence, delivered outstanding profitability and organic capital generation. In 2Q24 RoTE was 19.8% while at a 13% CET1 ratio was 23.6%, up by 2.6 p.p. and 2.3 p.p. respectively versus prior year. 2Q24 net profit reached €2.7 billion, with a 15.9 per cent increase year on year.
The 2Q24 financial outcome reflects high-quality growth and delivery across all key levers, regions and product factories, without compromising on investments. These excellent results were driven by €6.3 billion of net revenues in 2Q24, an increase of 6.0 per cent year on year, underpinned by net interest income (“NII”) of €3.6 billion, €2.1 billion of fees, and €15 million of loan loss provisions (“LLPs”).
NII was broadly stable quarter on quarter at €3.6 billion, with a lower Euribor and a disciplined management of our pass-through, closing the quarter at an average of circa 32 per cent. The Group’s prioritisation of quality and profitable clients and segments continues to result in a superior and capital generative net NII. NII was up 1.9 per cent year on year.
The Group confirmed its structurally low and less volatile Cost of Risk (“CoR”) at 1 basis point in 2Q24, booking €15 million of LLPs. The Group continues to have a high quality, geographically diversified and resilient credit portfolio with sound coverage levels and strong lines of defence with €1.7 billion of overlays on the performing portfolio. The FY24 CoR guidance remains unchanged at below 20 basis points.
The very strong increase in quarterly fees of 10.0 per cent year on year demonstrates the effectiveness of our strategic direction and investments. The improvement was spread across most fee categories, and particularly led by investment (+21.1 per cent year on year), advisory & financing (+8.5 per cent year on year), as well as insurance and payment fees. Such performance once again highlights the benefits of our diversification and product factories, resulting in a diversified fee base of 34 per cent out of total gross revenues. Fees were up 6.6 per cent half-year on half-year, or 8.6 per cent when excluding the impact arising from the current account fee reduction in Italy and higher securitisation costs.
In 2Q24 operational costs were €2.3 billion, reduced by 1.7 per cent year on year. This trend confirms the Group’s ability to manage its costs despite inflation while also investing in future growth. Thanks to the proactive actions taken in the past quarters, the already industry leading cost-income-ratio (“C/I”) further improved by 2.9 p.p. versus prior year to 36.3%. The Group continues to be a sector leader in capital generation, with 234 basis points of organically generated capital in 1H24, or €6.7 billion, supporting the €5.2 billion accrued for distributions in 1H24, resulting in a CET1 ratio of 16.2%. RWAs were reduced by 1.0 per cent quarter on quarter to €276.9 billion, reflecting UniCredit’s commitment to active RWA management to improve capital efficiency.
In line with UniCredit’s unwavering commitment to shareholder value creation, the third and final tranche of €1.5 billion out of the total 2023 share buy-back of €5.6 billion is currently being executed. The second tranche of the 2023 share buy-back in amount of €1.6 billion was concluded on 20 June 2024.
The 2024 interim distribution is confirmed. The interim cash dividend, which will be defined by the UniCredit Board of Directors on 23 October 2024, after the completion of the necessary requirements, envisages a distribution of circa €1.4 billion – with the ex-dividend date on 18 November 2024, record date on 19 November 2024 and payment date on 20 November 2024 – whereas the interim share buy-back was already authorized for an amount of up to €1.7 billion by the Shareholders’ Meeting held on 12 April 2024 and is subject to supervisory approval.
FY24 net revenue guidance is upgraded to above €23 billion, while the organic capital generation guidance is improved to above 350 basis points. The net profit guidance is confirmed at above €8.5 billion, retaining further flexibility to secure 2025-26, and confirming our confidence in a high sustainable RoTE >15% and strong growth in EPS and DPS.
Our FY24 distribution guidance is confirmed in line with FY23. On a calendar year basis, the 2024 distribution is expected at circa €10 billion.
UniCredit continues to make significant progress on its ESG ambitions, recently disclosing new Net Zero interim targets for Shipping and Commercial Real Estate. The Bank has now outlined its ambitions for seven of the most carbon-intensive sectors, including an industry-leading phase-out policy for coal, a clear sign of how we are embedding ESG in our financing activities.
UniCredit has recently announced the launch of Skills for Transition: the initiative, entirely funded by the bank, sits firmly in line with UniCredit’s strong commitment to promoting a just and fair transition, as well as its consistent support for education – a key driver for Europe’s future. It will be comprised of a social programme spanning over six UniCredit Group countries that delivers strategic training to young people and companies expected to be impacted by the green transition, helping them to develop the skills they need to meet the demands of a changing environment whilst generating a measurable social impact.
In June 2024, the bank launched ‘UniCredit for CEE’, a new initiative delivering concrete financial and advisory solutions across Central and Eastern Europe aimed at helping micro and small enterprises, including organizations from the third sector, to grow and confront the issues associated with the green transition. The initiative makes available 60 financing solutions, worth over €2.6 billion, over the course of 2024.
UniCredit has also been recognised Best Bank for ESG in Italy, Austria, Bosnia & Herzegovina, Czech Republic and Romania at Euromoney’s 2024 Awards for Excellence, highlighting the progress we are making in integrating ESG into our operations.
FY24 calendar distribution of circa €10 billion, of which €3 billion of cash dividend paid in April 2024, €1.1 billion of FY23 share buy-back already executed in 1Q24 (i.e. not including the €1.4 billion of FY23 share buy-back already executed during 2023 calendar year) and the €3.1 billion related to the residual FY23 share buy-back, and circa €3.1 billion FY24 interim distribution (o/w €1.7 billion share buyback, €1.4 billion cash).
The key recent events in 2Q24 and since the end of the quarter, include:
- Notice of early redemption UniCredit S.p.A. €750,000,000 Fixed to Floating Rate Callable Non-Preferred Senior Notes due July 2025 (the “Notes”) Isin XS2021993212 (press release published on 3 June 2024);
- Notice of early redemption UniCredit S.p.A. €1,250,000,000 Fixed to Floating Rate Callable Senior Notes due June 2025 (the “Notes”) Isin XS2017471553 (press release published on 3 June 2024);
- UniCredit successfully issues dual tranche Senior Non-Preferred bonds for a total amount of EUR 2 billion (press release published on 4 June 2024);
- UniCredit above MREL requirements set by Resolution Authorities (press release published on 17 June 2024);
- 2023 third and final share buy-back tranche of €1.5 billion announced on 21 June 2024, immediately after the completion of the second one. As of 19 July 2024, and considering also the purchases made under the first and second tranche, UniCredit purchased a total of 156.1 million shares equal to over 9% of share capital;
UniCredit announces the acquisition of Aion Bank and Vodeno, next generation core banking platform, integrated with an independent banking license to strengthen client acquisition and product development, enhancing future technological innovation (press release published on 24 July 2024).
