UNCRY - UniCredit S.p.A. (UNCRY) Q4 2023 Earnings Call Transcript

2024-02-05 11:26:04 ET

UniCredit S.p.A. (UNCRY)

Q4 2023 Earnings Conference Call

February 05, 2024, 04:00 AM ET

Company Participants

Magda Palczynska - Head, IR

Andrea Orcel - CEO

Stefano Porro - CFO

Conference Call Participants

Antonio Reale - Bank of America

Andrea Filtri - Mediobanca

Britta Schmidt - Autonomous Research

Chris Hallam - Goldman Sachs

Pamela Zuluaga - Morgan Stanley

Delphine Lee - JPMorgan

Hugo Cruz - KBW

Marco Nicolai - Jefferies

Presentation

Operator

Good morning, ladies and gentlemen. Before I hand over to Magda Palczynska, Head of Investor Relations, a reminder that today's call is being recorded. Madam, you may begin.

Magda Palczynska

Good morning, and welcome to UniCredit's Fourth Quarter and Full Year 2023 Results Conference Call. Andrea Orcel, our CEO, will take you through the results. This will be followed by a Q&A session with Andrea and Stefano Porro, our CFO. Please limit yourself to two questions.

With that, I will hand over to Andrea.

Andrea Orcel

Good morning and thank you for joining us. Today, we will walk you through what you have achieved thanks to our UniCredit Unlocked plan, our goals and our outlook for 2024. I have always stated that my ambition is to build a bank that is strongly grounded in the right principles and values, one that delivers long-term quality growth and value for all our stakeholders, our shareholders, our employees, our clients and our communities. As we report our 12th consecutive quarter of quality profitable growth across all regions, I can proudly say that in these last three years we have fulfilled this ambition.

For our shareholders, we delivered quality growth, operational and capital excellence, sustainable profitability, capital generation and distributions, all underpinned by strong capitalization, liquidity and asset quality. For our employees, we have focused on providing a motivating vision, a rewarding and merit-based environment, a culture to which they identify and ultimately pride in what we are achieving. And for our clients and community, they are at the heart of everything we do. We have improved the quality of service and support we provide, offering best-in-class product through diversified, integrated and strengthened channels. This commitment to delivering and pursuing excellence has been our guiding principle and driven all that we have done so far and it will continue to be our focus as we move ahead.

UniCredit had its best year ever in 2023, the culmination of a three-year journey which delivered for the present while transforming our bank and preparing for the future. We will review our past accomplishments and look ahead to 2024 and beyond, where our sights are set on new heights. This is the year we grew our net profit to €8.6 billion, up 54% while continuing to invest in the future and expensing €1.1 billion of integration costs. Without these, our net profit would have been €9.5 billion. We delivered a record return on tangible equity of 16.6%, 5.8 points higher than last year, or 20.5% with a CT1 ratio of 13% adjusting for our notable excess capital.

Fourth quarter was much better than expected, with net profit up 19% despite higher integration costs to secure our future. Without them, net profit would have been up 37%. We generated €12 billion in capital organically this year, underpinning our proposed distribution of €8.6 billion, or 100% of net profit, €3 billion dividend and €5.5 billion share buyback, while reinforcing our CT1 ratio by 100 basis points to 15.9%. Following new EBA rules, we adjusted Q4 CT1 and will continue to adjust going forward as we accrue distribution, both cash and share buyback. Our cumulative past three years distribution exceeds €17.5 billion, more than our market cap at the beginning of 2021.

At the same time, we increased CT1 by circa €10 billion in the period. Our per share growth continues to be industry leading, with EPS up 74%, DPS 80%, and tangible book per share up 17% this year. The quality of such growth is underscored by the progress on our three financial levers and a 12% reduction in share count over the year, 30% reduction since the beginning of 2021....

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