On 23 October 2023, the Board of Directors of UniCredit S.p.A. ("UniCredit" or "the Group") approved the 3Q23 and 9M23 Consolidated Results as of 30 September 2023.
Another strong set of financial results are a further demonstration of UniCredit's journey in building sustainable excellence. For the 11th consecutive quarter, the Group affirms its transformation path by delivering across the three levers of net revenues, costs, and capital efficiency with increased high quality risk-adjusted returns, well positioned to withstand macroeconomic uncertainties.
The bank's transformation is further evidenced by the 3Q23 RoTE1 of 23.4% and 3Q23 stated net profit over €2.3 billion. In 9M23 stated net profit reached a record €6.7 billion, a 67.7% increase compared to 9M22.
The 3Q23 financial outcome reflects consistent growth across all regions, leveraging a unique pan European model, with €5.8 billion of net revenues in 3Q23, an increase of 23.1% year on year, driven by net interest income ("NII") of €3.6 billion, up 45.0% year on year mainly due to higher rates and well managed deposit pass-through. Fees stood at €1.8 billion, down 5.2% year on year largely driven by the impact of current account fees reductions in Italy and higher securitization costs. Excluding these, fees were down 1.3% year on year affirming their resilience despite macroeconomic headwinds.
Loan loss provisions ("LLPs") stood at €135 million in the quarter resulting in a structurally low cost of risk ("CoR") of 12 basis points in 3Q23. Together with a less volatile CoR, this reflects the Group's healthy asset quality and is further strengthened by a consistently low expected loss, low non-performing exposures ("NPEs") with high coverage, low default ratios, as well as the existing €1.75 billion overlays. The soundness of the Group's staging, overlays and provisions is partially reflected in the observed writebacks.
In 3Q23 operational costs were €2.3 billion, flat quarter on quarter and down by 2.3% year on year, despite inflationary pressures, confirming the Group's ability to structurally reduce its cost base while protecting revenue growth and executing on investments that will ensure future success. As part of these self-funding investments UniCredit has hired circa 7.500 employees in the front line, since 2021; developed best-in-class products via the Group's corporate, individual and payments factories, complemented with an ecosystem of best-in-class partnerships. The Group's digital transformation is well underway, with a new management team and targeted investments in infrastructure and architecture, Data and AI, and people and talent.
In addition to the above, further financial investments since 2021 secure long-term profitability and reinforce existing lines of defence: integration costs totalling circa €2 billion are enabling ongoing transformation of the organisation and targeted cost reductions; overlays of €1.75 billion strengthen the Group's asset quality protecting the structurally low cost of risk; and Risk weighted assets ("RWA") reductions of circa €26 billion, via initiatives such as increased securitization programs and more accurate capital allocation at client level, enhancing capital efficiency. Together, these lines of defence lay the foundations to propel profitability in the future.
The Group continues to drive best-in-class capital efficiency, with 321 basis points of organically generated capital in 9M23, or €9.9 billion, well ahead of UniCredit Unlocked, and leading to a stated CET1 ratio of 17.19% net of the €2.3 billion dividend accrued in 9M23 and the €3.34 billion share buyback program of 2022. RWA decreased to €290.1 billion, down 9.3% year on year.
Our focus on creating shareholder value continues, improving our profitability and further boosting metrics on a per share basis via share buybacks, generating in 9M23 EPS[6] of €3.43, which almost doubled compared to 9M21, accrued DPS[7] of €1.28, a threefold increase since 9M21, and TBVPS[8] of €31.42, up 35% since 9M21.
On the back of an improved interest rate environment, and deposit pass-through assumptions, UniCredit has improved its financial guidance[9] for 2023 to NII of at least €13.7 billion, translating to net revenues above €22.2billion. Net profit[10] guidance remains at or above €7.25 billion. We confirm our ambition to maintain 2024 profitability in line or above with 2023 and a shareholder distribution intention of least €6.5 billion3.
UniCredit has opted to contribute €1.1 billion for the Italian 2024 bank tax towards its non-distributable reserve. The Group's support towards families and communities amid the cost-of-living crisis remains imperative and is demonstrated via tangible actions such as the disbursement of a second tranche of "UniCredit per Italy", channeling €10 billion in favour of households and businesses, and the reduction of current account fees in Italy.
UniCredit remains focused on supporting clients, employees, and communities to progress and facilitating clients in a just and fair green transition. The Group's efforts to strengthen its focus on social issues coupled with the integration of ESG practices into lending led to an important MSCI ESG Rating upgrade to 'AA'. MSCI ESG Ratings aim to measure a company's resilience to long-term ESG risks and scale across the most relevant key issues based on a company's business model. The upgrade reflects the progress UniCredit has been making to integrate all ESG factors into the Bank's governance, business, risk and credit management, metrics and operations. The Group will remain committed to play an important role in the social function that goes far beyond traditional banking activities.
The momentum of the Group's financial success and strategic investments in digital and payments is further evidenced by The Banker award for "Best Bank for Innovation in Digital Banking" and "Best Bank for Payments Globally". These awards are a testament of the successful ongoing execution of the industrial and digital transformation and the commitment and dedication of the Group in its digital journey. In addition to recent recognition for the bank's digital initiatives, the bank has also won up awards for Best Fintech Collaboration (from Treasury Management International), Best Trade Finance Provider in Western Europe (Global Finance) and Best Bank for Transaction Services in CEE (Euromoney).
