UniCredit: 4Q22 & FY22 Group Results

Record 4Q22 and best Full Year results in a decade

Consistent delivery across our three levers and profitable growth with Group net profit of €5.2 billion, or €6.5 billion stated

Entering 2023 with strong momentum, lines of defence and confidence: prepared for macro-economic challenges and already delivering above UniCredit Unlocked

Strong commercial momentum: with Group total revenue of €20.3 billion, NII of €10.7 billion and fees of €6.8 billion. The fourth quarter was the eighth consecutive quarter of growth   

Ongoing focus on efficiency without constraining investments: Group costs reduced by 2 per cent to €9.6 billion for FY22, despite extraordinary inflationary headwinds and without impacting growth. This resulted in positive operating leverage of 16 p.p.

Best in class capital: FY stated CET1 ratio at 16 per cent. Pro-forma for distributions, CET1 ratio at 14.91 per cent, up 78 basis points year on year, thanks to a record organic capital generation of 279 basis points, reflecting significant progress in our profitability and in driving capital efficiency

Committed to delivering superior shareholder value: 10.7 per cent RoTE, up 3.4 p.p. year on year (12.3 per cent when adjusted for excess capital to 13.0 per cent) and EPS up 58 per cent to €2.50

Shareholder distribution¹ of €5.25 billion: up by €1.5 billion (up 40 per cent) versus prior year, with a proposed cash dividend of €1.91 billion and share buyback of €3.34 billion, pending approvals¹; delivering sustainable and attractive returns while preserving capital strength

Proactively enhanced lines of defense: FY22 Cost of Risk of 41 basis points, or 7 basis points excluding overlays and Russia, proof of our robust credit quality. €1.8 billion of overlays and c.€0.5 billion of Russia provisions to protect against an uncertain macroeconomic backdrop

Clear and conservative approach to Russia²: exposure³ well managed, highly provisioned and reduced by over €4 billion at minimum cost during the year

Strong progress on sustainability: a year of achieving significant ESG milestones, setting of net zero targets for 2030 and uniting our people with a clear culture

FY22 Guidance excluding Russia exceeded in all key Financials¹:

Note:  (*) Organic Capital Generation including Russia

^[1] All figures hereafter are related to Group excluding Russia, except CET1 ratio, or unless otherwise stated.

On 30 January 2023, the Board of Directors of UniCredit S.p.A. ("UniCredit" or "the Group") approved the 4Q22 and FY22 Consolidated Results as of 31 December 2022.

The outstanding quarterly and annual results are proof that UniCredit is a transformed bank with stepped up and a solid capital position providing the ability to withstand macroeconomic headwinds.

Russia cross-border exposure has been well managed and reduced overall by circa 66 per cent or circa €4.1 billion³ at minimal cost during the year, through proactive and disciplined actions. UniCredit is committed to maintaining a progressive de-risking approach.

On the back of an improved interest rate environment, low cost of risk, structural cost reduction, and progress on capital efficiency ambitions, UniCredit announces 2023 net profit, including Russia, broadly in line with the Group net profit of 2022¹. The financial reporting will include Russia going forward. UniCredit is aiming for a FY23 distribution broadly in line with FY22.

The Group, excluding Russia, has delivered record revenue growth driven by a favourable interest rate environment and strong commercial momentum. This has resulted in €4.7 billion of net revenues in 4Q22, an increase of 34.9 per cent year on year, and €18.1 billion in FY22, an increase of 14.7 per cent year on year. This reflects high risk-adjusted returns, delivering on all key levers across all businesses, underpinned by the significant net interest income ("NII") growth in 4Q22, of almost 41 per cent year on year, and 42.5 per cent quarter on quarter to €3.2 billion. In FY22 NII grew 16.0 per cent year on year to €9.9 billion. The low loan loss provisions ("LLPs"), at €0.6 billion in the 4Q22 decreased 17.8 per cent year on year in the quarter, despite having reinforced the already existing strong lines of defence throughout the year.

Excluding Russia, FY22 operational costs were reduced by 2.6 per cent year on year, confirming the Group's strong cost discipline in structurally reducing the cost base while protecting revenue growth, despite significant inflationary pressures which were almost 9 per cent in UniCredit's footprint.

The Group continues to drive best-in-class capital efficiency, with 117 basis points of organic capital generation excluding Russia in 4Q22 and 271 basis points for the FY22, well ahead of the plan, and leading to a stated CET1 ratio of 16.00 per cent which already deducts regulatory headwinds, the FY22 dividend accrual and the impact of Russia.

Our excellent results and focus on sustainable and attractive returns are validated by a 2022 shareholder distribution of €5.25 billion, a €1.5 billion increase compared to the previous year, composed of a proposed¹ cash dividend of €1.91 billion and share buyback of €3.34 billion, subject to supervisory and shareholder approvals. We aim to execute the share buyback in two tranches, the first one of circa €2.34 billion to commence as soon as possible post the AGM approval on 31 March 2023, while the second tranche of circa €1.0 billion is expected to commence during the second half of 2023, shortly after the completion of the first tranche.

The FY22 diluted EPS growth year on year of 58.1 per cent, or 75.6 per cent excluding Russia, reflects superior shareholder value creation which was bolstered by absolute growth and enhanced by 2021 share buybacks. The proposed €1.91 billion of cash dividends, up 63 per cent and reflecting a 35 per cent cash dividend payout ratio on the Net Profit for the Group excluding Russia, enables a proposed DPS equal to 98.72 euro cents^1,6 equalling a year on year increase of 84 per cent, evidence of UniCredit's capability to deliver compelling shareholder value.

The combination of the three levers of net revenues, costs and capital efficiency is already yielding good results. This is further evidenced by the FY22 RoTE, excluding Russia, of 11.7 per cent.

The existing lines of defense have been further proactively strengthened by building high provisioning levels, reinforcement of current overlays on performing exposures at €1.8 billion, and a rigorous risk approach reflected in the robust credit book, strengthening the Group's capacity to withstand macroeconomic shocks.

Cost of Risk ("CoR"), excluding Russia, stood at 56 basis points in 4Q22, and 23 basis points for the full year 2022, better than 2022 guidance.

Key recent events include the following:

• 2021 second share buyback tranche of €1.0 billion completed on the 30 November 2022 with all shares cancelled on the 14 December 2022. UniCredit purchased 87 million shares equal to 4.3 per cent of share capital.
• Signed commercial partnership with Azimut for the distribution of asset management products in Italy.
• Successful issuance of €1.0 billion UniCredit SpA Senior Preferred.

Dividend per share (DPS) calculated as of 30 January 2023 based on the best estimate of the expected number of shares eligible for dividend payment. The final DPS will be communicated according to the ordinary procedure. The 2023 AGM is expected to be held on the 31st of March 2023. As a result, the expected dividend dates are: record date 24 April 2023, ex-dividend date 25 April 2023, payment date 26 April 2023. 

Andrea Orcel, Chief Executive Officer of UniCredit S.p.A. said:

UniCredit delivered a record set of financial results demonstrating significant progress in our industrial transformation and our ability to drive excellent performance across the cycle.

We delivered a full year net profit of €5.2 billion, our best results in over a decade. Our growth focus, cost discipline and capital efficiency have lifted RoTE to 10.7 per cent, surpassing the UniCredit Unlocked target. This includes substantial provisions taken as well as proactive measures to enhance the existing lines of defence, reinforcing our rock-solid balance sheet and ability to weather ongoing uncertainty. We have now grown for eight consecutive quarters, clear evidence of a transformed UniCredit which has proven resilience and strength.

Double digit net revenue growth year on year was underpinned by positive commercial momentum, a supportive interest rate environment, cost reduction while investing for the future and despite unprecedented inflation, and an ongoing low cost of risk.

We ended the year with a CET1 ratio of 16 per cent boosted by our best-in-class organic capital generation. We intend to distribute a total of €5.25 billion in dividends and share buybacks for 2022, an increase of €1.5 billion versus prior year, or on a DPS basis an increase of over 80 per cent, pending approvals. We are meeting our commitment to shareholders for a sustainable and attractive distribution policy while maintaining our capital strength.  

Our progress towards Net Zero announced today caps a year of significant evolution in our ESG journey. We will continue to serve and support our clients and communities in a just and fair transition, striving to lead by example across all components of ESG.

Finally, I want to thank all employees for their hard work and commitment. As we face 2023, UniCredit is stronger than ever, and is well positioned to succeed. We are firmly focused on executing UniCredit Unlocked and are looking to the future with confidence.

¹Distribution subject to shareholder and supervisory approvals.

²Russia includes the local bank and legal entities, plus the cross border exposure booked in UniCredit SpA, see page 13 for the Russia segment 4Q22 results. For Group

consolidated results, including Russia, see page 14.

³Delta since 8th March 2022 excluding change in FX hedging and additional exposures (as per page 3 of 1Q22 market presentation)​.

⁴All figures hereafter are related to Group excluding Russia, except CET1 ratio, or unless otherwise stated.

⁵UniCredit Group 2023 financial guidance available in section "Group key financial 2023 guidance" at page 15.

⁶Dividend per share (DPS) calculated as of 30 January 2023 based on the best estimate of the expected number of shares eligible for dividend payment. The final DPS will be communicated according to the ordinary procedure. The 2023 AGM is expected to be held on the 31st of March 2023. As a result, the expected dividend dates are: record date 24 April 2023, ex-dividend date 25 April 2023, payment date 26 April 2023. 

Milan, January 2023

Enquiries:

Media Relations: e-mail: MediaRelations@unicredit.eu

Investor Relations: e-mail: InvestorRelations@unicredit.eu