FINANCIALS: Unicredit Results 24-Jul. Expectations Up; Russia and M&A Are Risks

Unicredit (UCGIM: Baa3/BBB-/BBB-) reports 2Q24 on 24-Jul. Spreads have performed well after good 1Q24 figures led to guidance upgrades but Russia remains a thorn in the bank’s side and M&A risk may not be far away either.

• 1Q24 results (7-May) saw a decent (20%) pre-tax profit beat (revenue-driven) but underlying (ex-Russian write-backs) loan losses did miss. NPLs were broadly stable though and mgmt upgraded FY24 guidance which please the equity market.
• M&A is, again, a feature here with CEO Orcel specifically welcoming Marcon’s merger-friendly comments. UCG has been linked with Commerzbank, Banco BPM and Monte Paschi but is yet to actually move on anything major. It is, reportedly, in the running for Luminor (in Estonia). Russia is a wider feature with the ECB pressuring the bank to wind down more quickly.
• Spreads have done well since those results, 10bp tighter (€IG banks -1bp) with nearly all of that outperformance in the last month. The equity has shown small outperformance (7%) and did have a relatively stellar first five months of the year.
• Revenue estimates have been massaged up c.2%, pushing earnings up 4-5% for the coming two years, on the back of that improved guidance message.

Results are due pre-market with an 0900 (London time) conf call.