By Valentina Za
MILAN (Reuters) -UniCredit raised its profit outlook on Wednesday and said it would start paying out half of its net profit in cash to investors from next year, after a higher-than-expected third-quarter net profit.
UniCredit, Italy’s second-largest bank by assets, is awaiting regulatory approval to become the main investor in German rival Commerzbank (ETR:), which on Wednesday reported a smaller-than-expected decline in third-quarter revenues .
“During the quarter we deployed some of our excess capital and made a strategic investment in Commerzbank, which may or may not ultimately lead to a full combination,” CEO Andrea Orcel said in a statement.
UniCredit said net profit for the July-September period was 2.51 billion euros, against an average forecast of 2.27 billion euros ($2.48 billion) in a company-compiled consensus.
UniCredit increased its 2024 profit target from EUR 8.5 billion to over EUR 9 billion, promising to repeat these results in 2025 and 2026 while increasing shareholder returns.
From 2025, UniCredit will increase its cash payout ratio from 40% to 50% of net profit. Orcel has prioritized share buybacks, noting that shareholders are in favor of this form of return.
Sales in the third quarter decreased by 3% compared to May-June, while sales increased by the same percentage annually.
Sales of 6.1 billion euros slightly exceeded analyst expectations, driven by strong net interest income.
($1 = 0.9158 euros)
