Shares of UniCredit S.p.A (IT:UCG) rallied over 8% after the Italian bank announced solid shareholder returns of €8.6 billion for Fiscal 2023, marking an increase of €3.35 billion from the previous year. Moreover, the company issued upbeat guidance for Fiscal 2024 following impressive performance in the fourth quarter of 2023.
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UCG shares touched a nine-year high today and have advanced 57% over the past year.
UniCredit’s Impressive Results and Outlook
UniCredit’s Q4 2023 “stated” net profit increased 14% to €2.81 billion, with net interest income (NII) up 5.7% to €3.61 billion due to higher interest rates. The bottom line was way ahead of analysts’ consensus estimate of €1.2 billion. The bank’s fourth-quarter results gained from lower-than-estimated loan loss provisions.
For the full-year FY23, the bank’s underlying net profit increased 54% to €8.6 billion. Remarkably, the bank announced a 100% pay-out on its FY23 net profit, with shareholder returns comprising share buybacks of €5.6 billion and dividends worth €3.0 billion.
Looking ahead, UniCredit expects to distribute at least 90% of its net profit in FY24. It is also introducing an interim dividend. Despite an uncertain macro backdrop, the bank expects its FY24 net profit to be in line with last year’s net profit of €8.6 billion, up from its previous estimate of at least €7.25 billion. While interest rates are expected to normalize as the year progresses, the bank anticipates that it would benefit from higher fees and commissions.
Overall, UniCredit’s performance reflects solid execution under the leadership of CEO Andrea Orcel. The CEO highlighted that the bank has declared shareholder returns of €17.6 billion since 2021.
Is UniCredit a Good Investment?
Following the results, analysts at Jefferies, UBS, and JPMorgan reiterated a Buy rating on UniCredit stock. With seven Buys and one Hold, UCG stock has a Strong Buy consensus rating. The UniCredit share price target of €33.41 implies about 16% upside potential.
