UniCredit SpA Chief Executive Officer Andrea Orcel says Italy’s second biggest bank can distribute higher returns to shareholders on its 2022 earnings as rising rates and the business’ rationalization provide a tailwind for the bank.
(Bloomberg) — UniCredit SpA Chief Executive Officer Andrea Orcel says Italy’s second biggest bank can distribute higher returns to shareholders on its 2022 earnings as rising rates and the business’ rationalization provide a tailwind for the bank.
“We indicated at the beginning of the year that we had an ambition to be in line or higher than 2021,” Orcel said in an interview with Bloomberg Television’s Francine Lacqua at the World Economic Forum in Davos on Thursday. “I would say that on the numbers that we had on at the nine months, we can be higher.”
Since Orcel took the helm at Italy’s second biggest bank by assets in 2021, he’s exited businesses and cut jobs in non-core locations, shifting to more lucrative products and capital-light activities to streamline the lender. He’s pledging €16 billion of returns through a combination of buybacks and dividends through 2024, one of the biggest shareholder payouts in Europe. The bank, which along with competitors is benefiting from rising interest rates, boosted revenue and profit targets for 2022 for a second straight quarter in October.
UniCredit distributed €3.8 billion euros in a mix of €1.2 billion cash dividends and €2.6 billion share buybacks on 2021 earnings.
Orcel also added his voice to the cautious optimism from some delegates at Davos on the macro-economic outlook. The bank, he said, is expecting Europe to avoid a recession this year and may even see slightly positive growth. At the same time, he warned several risks could still derail the outlook.
The bank has taken a relatively optimistic view, “but taking big buffers in case we are wrong,” to cover souring loans said Orcel. The bank’s stock on non-performing loans is also declining, he said.
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