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Unicredit; Results Beat, 100% Payout Implies Both Confidence And Further Leverage

FINANCIALS

Unicredit (UCG IM) reported 4Q23 which beat consensus and meaningfully upgraded payout to equity holders which is a good sign of mgmt confidence but also a marginal credit negative. First of the big Italians to report so good laterals to Intesa (reports: 6-Feb) and most of the Italian regionals.


  • Revenues were EUR5.98bn (+4.6% y/y, consensus: 5.66bn), operating costs were broadly flat and loan losses were EUR300m (just over half of 4Q22 level, consensus: 235m) so a big beat there. This also drove the EPS and DPS beats.
  • In credit terms, loan losses were 28bp of loans (down from 46bp in 4Q22) and non-performers were 66bp of lending (1bp better than Sep-23). CET1 is 15.9% (down 130bp from Sep-23 under new share buyback rules) and total capital is 20.9%.
  • Equity holders are likely to be pleased with 100% of net profit distributed for FY23 and future guidance of 90%+. Whilst that degree of mgmt confidence is good, credit investors can see this as leveraging the base.

Conf call is 0900 London time at https://multimedia.unicredit.eu/view/05022024-4Q23-Group-Results-Presentation

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