UniCredit 4Q Hit by Impairments, Provisions -- Earnings Review

By Pietro Lombardi

UniCredit SpA released its fourth-quarter results late on Wednesday. Here is what you need to know.

NET LOSS: The Italian bank posted a quarterly loss of 1.18 billion euros ($1.43 billion). This compares with a EUR835 million loss a year earlier and analysts' expectations of a EUR717 million loss.

REVENUE: The bank's revenue fell almost 13% on year to EUR4.24 billion. Analysts had expected revenue of EUR4.29 billion.

WHAT WE WATCHED:

-RETURNS TO SHAREHOLDERS: Overall, UniCredit plans to distribute EUR1.1 billion to shareholders in 2021, via a mix of cash dividend and buybacks. Buybacks should make up around EUR800 million of the planned distribution, with cash dividend accounting for the remaining EUR300 million.

-BAD-LOAN PROVISIONS AND IMPAIRMENTS: The fourth-quarter net loss was worse than expected, dragged by impairments. The lender posted a EUR878 million impairment related to its corporate-and-investment banking unit.

Bad-loans provisions of EUR2.06 billion were 25% higher than in the same period last year but below the EUR2.27 billion analysts had forecast.

-TARGETS: For this year, the bank targets an underlying net profit of more than EUR3 billion, while revenue and costs are expected to be in line with previous guidance. Cost of risk should be close to 70 basis points.

The bank delivered an underlying profit of EUR1.3 billion for last year, beating its guidance of more than EUR800 million. Cost of risk was 105 basis points, at the lower end of its guidance. Costs for the year fell 1.2%.

Write to Pietro Lombardi at [e-mail]; @pietrolombard10

(END) Dow Jones Newswires

February 11, 2021 08:34 ET (13:34 GMT)

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