Countdown to publication of UniCredit earnings, the Italian bank led by CEO Andrea Orcel, which will announce its quarterly results on 7 May.
The bills will arrive on the same days other large Italian banks, such as Intesa SanPaolo, Banco BPM, Bper and Mps.
Encouraging indications on the quarterly results of Italian credit institutions have arrived recently with the publication of a report by JPMorganwhich confirmed confidence in the sector, announcing the upward revision of the EPS estimates of Italian banks by 1-4%.
In the specific case of UniCredit, the bank which, under the leadership of CEO Orcel, managed to repeatedly announce, during 2023, profits and promises of dream dividends, JPMorgan went well above the estimates formulated by the consensus of analysts surveyed by Bloomberg, presenting a preview that reflects all its optimism towards Piazza Gae Aulenti.
Today the UniCredit stock marks a leap of around 2%, rising to 34.80 euros, continuing to ignore the latest rumors relating to theThe arrival of a letter from the ECB.
On the other hand, last week, on the occasion of the shareholders’ meeting which reconfirmed him at the helm of the group, the CEO Andrea Orcel practically reconfirmed the mantra more profits and dividends.
So far, Piazza Affari has proved the CEO’s strategy right: the UCG stock continues to grind upwards. In the last week alone it rose by 3.4%, marking a YTD leap of more than +41%, and reporting a performance, on an annual basis, of approximately +84.5%. In the last three years of trading, UniCredit shares have jumped by more than 330%.
UniCredit: consensus estimates on earnings, revenues, NII for the first quarter of 2024
The consensus of analysts interviewed by Bloomberg predicts for UniCredit a net profit of 2.113 billion during the first quarter of 2024, after accounting net profit of €2.8 billion, or net profit of €1.9 billion, received in the fourth quarter of 2023.
In the whole of 2023, it should be remembered, the accounting net profit of the UniCredit group was €9.5 billion, against a net profit of €8.6 billion, up more than 50% on an annual basis and at record levels in history.
Revenues are expected to remain at a stable level, at 5.979 billion, as in the last months of last year.
Regarding the trend of net interest marginon an adjusted basis the estimates are for a decline to approximately 3.513 billion, compared to the previous 3.610 billion euros, while commissions, again on an adjusted basis, they are expected to rise to 1.922 billion, from 1.793 billion in the fourth quarter.
Credit adjustments are estimates drop to 150.76 million, compared to the previous 300 million.
Focus on the net interest margin (NII) trend
The view of the analysts interviewed by Bloomberg is shared by Equita SIM analysts, which foresee a slightly contracting NII net interest margin on a quarterly basis, down 1%, “due to calendar effect, slight increase in deposit pass-through and lending dynamics still contracting in Italy and Germany”.
In any case, the NII is expected to be 3.6 billion euros, a value that it implies on an annual basis a very respectable growth of +8%.
Analysts are positive as is Bloomberg on the commission trends, for which they expect quarterly growth of 8% and a stable trend on an annual basis.
Revenue expectations are also similar, which Equita also considers stable, both on a quarterly and annual basis, to 5.9 billion euros.
Net profit is expected by Equita to be 2 billion euros, slightly below that forecast by Bloomberg.
In presenting their outlook on UniCredit’s accounts, Equita analysts also announced some upgrades last April 18, underlining that “expectations for the first quarter of 2024 and monetary policy expectations increase visibility on the FY24 guidance by approximately €8.6 billion”.
SIM thus revised its outlook on UniCredit’s 2024 net profit upwards by 3%, to €8.4 billion, motivating the move mainly with expectations of a higher NII (net interest margin) and lower provisions to cover any future losses.
In this way, estimating overall net profits of 8.4 billion euros for the whole of 2024, Equita has positioned itself “slightly below the company’s target”.
The SIM also presented UniCredit’s earnings outlook for the period 2025-26, estimating growth of “+4% on average”, in line with the decision to “maintain a more conservative approach with respect to the company’s ambitions on commission growth”.
Among the good news, the upward revision of the target price on the stock, equal to +10% to €38 euros based on a 2025 P/E of 6.9x, a P/TE of 1.1x and a ROTE of approximately 16%.
UniCredit earnings: JPMorgan’s optimism, also on Intesa SanPaolo
We come to this point at estimates that were drawn up by JPMorgan analysts, in particular to the estimates on PBT (profit before taxes), which Bloomberg forecasts at 2.920 billion in the first quarter of 2024, compared to 2.349 billion in the fourth quarter of 2023.
The analysts of the American financial giant are decidedly more optimistic, predicting a pre-tax profit of 3.396 billion, value 16% higher than that expected by Bloomberg, growing by 24% on an annual basis and by as much as 45% on a quarterly basis.
JPMorgan’s outlook is explained by the prospect of a higher turnover, equal to 6.15 billion euros, above consensus estimates of 3%, up 4% on an annual basis and 3% on a quarterly basis.
The experts of the US giant also estimate smaller provisions than those expected by the consensusor 115 million, a level lower than that expected by consensus by as much as 50%, up 24% on an annual basis but down 62% on a quarterly basis.
The expected trend is also better the net interest margin which, during the first quarter of 2024, for JPMorgan it was equal to 3.527 billion, better than the consensus of 3%, up 7% year-on-year and down 2% quarter-on-quarter.
JPMorgan’s outlook is better than consensus also in terms of the turnover of trading activities, while the estimates on CET1 FL are in line with those of Bloomberg, equal to 16.2%.
JPMorgan’s optimism concerns the entire banking sector, as stated in the outlook “Italian Banks Q1 preview – Strong quarter largely anticipated”
“In view of the first quarter results (3 May for Intesa SanPaolo and 7 May for UniCredit) we revise our EPS (earnings per share) estimates upwards by 1-4%, reflecting the recent trend of the sector and the our conversations with banks. Our earnings estimate upgrades are mostly sustained by the slight improvement in the trends of fees and commissions and by a cost of risk (CoR), which remains very low”.
At the same time, JPMorgan brought “small changes to NII taking into account improved collection costs”.
According to analysts, the first quarter results of Italian banks should also “be supported again by low deposit pass-through, slightly improved fee momentum, good cost control and still low levels of provisions” to address future credit losses.
“The result is that, probably, Italian banks will return to review the guidance on net interest margin and net profit”.
JPMorgan underlined that it continues to “prefer Intesa SanPaolo” thanks to the more diversified turnover and the margin for growth in commissions”, as well as for “the high profitability and return on capital” –
“We also see UniCredit well positioned, thanks to the more solid capital distribution capacity (therefore disbursement of dividends and buyback plans).
JPMorgan indicates among other things that the bank led by Andrea Orcel should give further details on how it intends to use the excess capital.
UniCredit will announce the accounts relating to the first quarter of 2024 after rival Intesa SanPaolo, which will lift the veil on profits on May 3rd.
Also for the Italian bank led by CEO Carlo Messina, consensus expectations are positive.
LAWS
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At the beginning of 2024, in publishing their financial statements, UniCredit and Intesa SanPaolo highlighted not only their respective record accounts, but also the differences that continue to characterize the way they remunerate shareholders.
The prudence shown by Intesa CEO Carlo Messina is highlighted, as he defined the excessive use of share buybacks by European banks is “almost pathological”.in order to reward members.
“We must be clear that companies are not cows to be milked, there must be a right balance to give cash dividends and then if there is additional capital make further distributions”, said Messina, presenting all the Intesa SanPaolo numbers.
The CEO of Intesa recalled that the bank has “always distributed cash dividends and we don’t want to include buybacks in the ordinary distribution”, specified the CEO, on the same day that Intesa made the big announcement on the buyback plan, for a value of 1.7 billion euros.
Messina has practically made it clear that, if it is a buyback, we must be talking about something extra.
A few days before, UniCredit had surprised the market again, promising even more attractive remuneration to stakeholders.
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It was the CEO himself, in the speech given during the shareholders’ meeting last week, to promise that the bank will not only not stop, but will aim to achieve even more ambitious objectives.
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Tags: UniCredit stock YTD earnings preview Orcel mantra dividends JPMorgan presents surprises
