On 26 July 2022, the Board of Directors of UniCredit S.p.A. ("UniCredit" or "the Group") approved the Consolidated First Half Financial Report as at 30 June 2022.
The quarter sets a number of records demonstrating the strong commercial momentum within the business. Excluding the impact of Russia, Group net profit was €1.5 billion, resulting in healthy organic capital generation of 67 basis points in the quarter resulting in a CET1 Ratio of 15.73 per cent.
Excluding Russia, the 2Q22 net revenues were €4.4 billion, 12.5 per cent higher year on year, reflecting high risk-adjusted returns across all regions, underpinned by the net interest income ("NII") increase to €2.3 billion, and by lower Loan Loss Provision ("LLPs"), reflecting solid asset quality.
Excluding Russia, 2Q22 operational costs were reduced by 4.4 per cent year on year, demonstrating the Group's discipline in managing the cost base while protecting revenue generation.
Russia exposure was reduced overall by circa €2.7 billion8, through proactive and disciplined actions, whilst Russia's Risk Weighted assets ("RWAs") were reduced by €2.7 billion. UniCredit is committed to maintaining a progressive de-risking approach.
The Group is well positioned and has the right foundations to enter a period of macroeconomic uncertainty given its strong CET1 ratio, enhanced business model with a capital light focus and solid asset quality. This is further strengthened by provisioning levels, existing overlays on performing exposures at circa €1.0 billion and a rigorous risk approach, strengthening the Group's capacity to absorb macroeconomic shocks. Gross Non-Performing Exposures ("NPEs") stood at €13.9 billion and are primarily composed of Unlikely-To-Pay ("UTP") which will further benefit from the recently announced partnership agreement with Prelios in Italy for the specialised management of UTPs. Both Group Net and Gross NPE ratios continued to decline quarter on quarter, to 1.5 per cent and 2.9 per cent, respectively.
Cost of Risk ("CoR"), excluding Russia, is well below guidance at 10 basis points, and full year guidance is improved to below 30 basis points7.
On 14 July 2022, the 2021 first share buyback tranche of €1.6 billion, equivalent to 7.4 per cent of share capital has been successfully completed, and on 19 July 2022 the shares were cancelled. The Group intends to call for an EGM in 3Q22 for shareholder authorisation to increase the number of shares to be purchased for 2021 the second share buyback tranche of €1.0 billion9.
The Group's 2Q22 CET1 ratio stood at 15.73 per cent, an improvement of 173 basis points quarter on quarter. This was mainly driven by organic capital generation of 67 basis points excluding Russia, and the positive impact from Russia of 62 basis points.
On the back of the strong financial results, and improved interest rate environment, UniCredit has improved its financial guidance for 20227, with revenues above €16.7 billion and net profit at circa €4.0 billion, excluding Russia.
The UniCredit Unlocked 2024 financial ambitions of average annual organic capital generation of 150 basis points, incremental net revenue of circa €1.1 billion and a RoTE of circa 10.0 per cent are confirmed under the slowdown scenario with positive results already being delivered by combining the three levers of net revenues, costs and capital efficiency. The Bank continues its focus on the execution of the 2022-2024 Strategic Plan to fully unlock the value of UniCredit and is committed to delivering attractive and sustainable returns, with the ambition to return at least €16 billion to shareholders by 2024.
Key recent events include the following:
- 2021 first share buyback tranche of €1.6 billion completed on 14 July 2022 with all shares cancelled on 19 July 2022. UniCredit purchased 162.2 million shares equal to 7.4 per cent of share capital.
- Executing strategy to reduce non-performing exposure, with the following actions:
o Disposal of circa €2.0 billion of UTP portfolio
o Disposals of circa €1.3 billion of NPL portfolio
o Signed partnership with Prelios for management of UTP loans in Italy.
- EGM in 3Q22 for shareholder authorisation to increase the number of shares to be purchased for 2021 second share buyback tranche of €1.0 billion9.
Andrea Orcel, Chief Executive Officer of UniCredit S.p.A. :
"UniCredit continued to perform well in the second quarter, leading to the best first half performance in over a decade driven by profitable growth, healthy organic capital generation and a reduction of our cost base despite the impact of inflation. Our CET1 ratio further strengthened to 15.73 per cent as we demonstrated strong asset quality, with a Cost of Risk at just 10 basis points, excluding Russia. On the back of our excellent performance and a more supportive interest rate environment we have improved our 2022 guidance, an important step in the delivery of our three year plan.
The global economy is facing unprecedented challenges and much uncertainty. It is at times like this that our unwavering focus on delivering our UniCredit Unlocked strategy is especially critical. UniCredit is built on solid foundations, which position us well to navigate whatever macroeconomic environment lies ahead. Ensuring we remain strong and resilient will allow us to fulfil our responsibility to our clients, communities and wider stakeholders, supporting them as they navigate challenging times ahead."
