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UniCredit has announced plans to return €8.6bn to investors after Italy’s second-largest bank reported quarterly profits that trounced analysts’ forecasts.
The payout, which will come via a combination of buybacks and dividends, caps a buoyant 12 months for UniCredit, which has enjoyed a windfall from higher interest rates.
The Milan-based bank disclosed the planned payout as it reported fourth-quarter profits of €1.9bn, almost triple analysts’ forecast. The better than expected performance was down to higher rates continuing to buoy the bank’s net interest income and lower provisions for bad debts, it said.
Chief executive Andrea Orcel said the decision to lift the full-year payout was “underpinned by extremely strong organic capital generation and with sustainability of returns secured by our strategic momentum and significant excess capital”.
However, the benefits from higher interest rates are expected to diminish as the European Central Bank weighs whether to cut interest rates in the face of a slowing eurozone economy.
Profits for the final quarter of last year were up on the €1.6bn the bank made in the same period in 2022.
Since Orcel joined in April 2021, UniCredit shares have been one of the best-performing among European banks. Investors are expected to back his appointment to a second three-year term at an annual shareholder meeting.
The €8.6bn UniCredit intends to return to shareholders will be made up of €5.6bn in buybacks and €3bn in dividends.
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