Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UniCredit SpA (UNCFF, Financial) reported record-breaking results for Q3 2024, marking 15 consecutive quarters of quality growth and improvement.
- The company achieved a return on tangible equity of 13% and a CET1 ratio of approximately 23.3%, showcasing strong capital efficiency.
- Net profit increased by 16% over the nine months, with EPS growth of 31% and accrued EPS by 48%, indicating robust financial performance.
- The company's strategy, UniCredit Unlocked, has proven effective, delivering consistent value and setting a new benchmark in banking.
- Operational efficiency improved, with costs declining by 1.2% over nine months and a cost-income ratio at an industry-leading level of 36.6%.
Negative Points
- The company anticipates a moderate reduction in net interest income (NII) next year, which could impact overall profitability.
- There are concerns about the potential impact of strategic investments, such as in Commerzbank, which could lead to further capital consumption.
- The cost of risk is expected to normalize, potentially increasing from the current low levels, which could affect future earnings.
- The macroeconomic environment remains challenging, with potential headwinds from rate normalization and inflationary pressures.
- The integration of strategic investments, such as Aion/Vodeno and Alfa Bank in Romania, may pose operational challenges and impact capital ratios.
Q & A Highlights
Q: Can you discuss your expectations for Net Interest Income (NII) into 2025, given the current trends in Russia, Italy, and Germany?
A: We expect a moderate reduction in NII next year, partially offset by fees. Despite this, we confirm that next year's bottom line will not be lower than this year's. Other dynamics in the P&L will support this outcome.
Q: Regarding your investment in Commerzbank, what hurdles need to be overcome for this to move forward?
A: The investment in Commerzbank is currently just that—an investment. Any further steps would require discussions with all stakeholders at Commerzbank. The timeline for any decision is longer than many expect, and we do not anticipate making a decision before a year from now.
Q: Would you consider a hostile approach to Commerzbank, and how do you view the role of German trade unions in achieving cost synergies?
A: The definition of hostility is subjective. Key stakeholders, including employee representatives and German institutions, are crucial for any transaction's success. It's premature to discuss hostility as there is no deal on the table. We are focused on ensuring our investment yields positive results.
Q: Can you explain the impact of strategic transactions on capital this quarter and any expected impacts in Q4?
A: This quarter, strategic transactions impacted capital by about 26 basis points, with Commerzbank accounting for over 10 basis points. We expect up to 30 basis points of impact in Q4, mainly from finalizing acquisitions in Romania and Aion/Vodeno.
Q: How would tariffs on European exports affect your corporate clients in terms of credit costs and loan demand?
A: Tariffs could impact corporate clients by increasing credit costs and affecting loan demand. However, our strategy focuses on maintaining asset productivity and leveraging other revenue streams to mitigate such impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
