UniCredit exists to empower communities to progress. To deliver for all our stakeholders across Europe and unlock the potential within each individual and community we serve.

We are a pan-European bank: our 13 banks across the continent work together as one, leveraging the strength of the collective to deliver for our clients, employees and investors.

We have a common culture that energizes and emboldens our people. We put the values of integrity, ownership and care at the heart of our decision-making and everything we do.

We are working to create the bank for Europe’s future - a bank that delivers for all stakeholders and is capable of unlocking the potential of people, businesses and communities across Europe.

UniCredit

Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it.

The trend often reverses before exiting the trade, leading to a short-term capital loss for investors. So, for a profitable trade, one should confirm factors such as sound fundamentals, positive earnings estimate revisions, etc. that could keep the momentum in the stock alive.

Investors looking to make a profit from stocks that are currently on the move may find our "Recent Price Strength" screen pretty useful. This predefined screen comes handy in spotting stocks that are on an uptrend backed by strength in their fundamentals, and trading in the upper portion of their 52-week high-low range, which is usually an indicator of bullishness.

UniCredit (UNCFF) is one of the several suitable candidates that passed through the screen. Here are the key reasons why it could be a profitable bet for "trend" investors.

A solid price increase over a period of 12 weeks reflects investors' continued willingness to pay more for the potential upside in a stock. UNCFF is quite a good fit in this regard, gaining 5.3% over this period.

However, it's not enough to look at the price change for around three months, as it doesn't reflect any trend reversal that might have happened in a shorter time frame. It's important for a potential winner to maintain the price trend. A price increase of 4.6% over the past four weeks ensures that the trend is still in place for the stock of this company.

Moreover, UNCFF is currently trading at 99.7% of its 52-week High-Low Range, hinting that it can be on the verge of a breakout.

Looking at the fundamentals, the stock currently carries a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises -- the key factors that impact a stock's near-term price movements.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Another factor that confirms the company's fundamental strength is its Average Broker Recommendation of #1 (Strong Buy). This indicates that the brokerage community is highly optimistic about the stock's near-term price performance.

So, the price trend in UNCFF may not reverse anytime soon.

In addition to UNCFF, there are several other stocks that currently pass through our "Recent Price Strength" screen. You may consider investing in them and start looking for the newest stocks that fit these criteria.

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UniCredit (UNCFF) Is a Great Choice for 'Trend' Investors, Here's Why

VIENNA (Reuters) - Banks in Austria had 2.2 billion euros ($2.35 billion) in exposure in mid-2023 to indebted property and retail giant Signa Group, owner of New York's Chrysler Building and Britain's Selfridges store, a person with knowledge of the matter said.

Raiffeisen Bank International (RBI) and UniCredit (LON:0RLS)'s Bank Austria accounted for two-thirds of this, said the person, who spoke on condition of anonymity.

The exposures, which have not been previously reported, shed some light on the financial links of Signa, which has been a major player in Europe's property industry for more than two decades.

RBI, which the person said had sharply reduced its exposure to the Signa group in recent years, declined to comment on Thursday. UniCredit also declined to comment on its exposure.

Signa did not immediately respond to an email seeking comment on Thursday. The European Central Bank (ECB), which supervises the banks, declined to comment.

On Wednesday, Signa said that Rene Benko would relinquish chairmanship of the company he founded and that it had brought in a restructuring expert to review its asset portfolio.

For years, the European real estate sector boomed as interest rates remained ultra-low, but a sharp rise in rates and building costs has driven some developers into insolvency as bank financing dries up, deals freeze and prices fall.

In recent weeks, Signa's sports retailer filed for insolvency and construction on a skyscraper was halted after the developer stopped paying its builder. Credit rating agency Fitch downgraded one Signa division to junk.

Benko, who remains Signa's largest shareholder, said on Wednesday he was certain it had "a very bright future".

Dozens of banks, insurance companies and pension funds have over the years financed and invested in Signa companies, bond sale prospectuses and a Signa presentation seen by Reuters show.

The financial links are especially strong in Austria, where Signa was founded and is headquartered.

Raiffeisen Landesbank Niederoesterreich-Wien, Raiffeisen Landesbank Oberoesterreich and Erste Group are also among the banks with exposures to Signa, the person said.

Erste said its "commercial real estate portfolio is really very sound". The other two Austrian banks declined to comment.

Banks decided to reduce their exposures after discussions with ECB supervisors, who are worried about Signa's prospects, another person with knowledge of that matter said.

A spokesperson for Austria's central bank said it had no concerns about the country's financial stability, when asked about Signa's financial position.

Austria's National Bank and its Financial Market Authority said they do not comment on individual institutions.

Signa has appointed consultants to help it conduct "a thorough review of all business areas, developing measures and drawing up an integrated concept for the group".

Restructuring expert Arndt Geiwitz who has taken on Benko's role said this week: "Signa needs calm and order at this time".

UniCredit, RBI among banks on hook for $2.4 billion in Signa loans -source By Reuters

VIENNA, Nov 9 (Reuters) - Banks in Austria had 2.2 billion euros ($2.35 billion) in exposure in mid-2023 to indebted property and retail giant Signa Group, owner of New York's Chrysler Building and Britain's Selfridges store, a person with knowledge of the matter said.

Raiffeisen Bank International (RBI) (RBIV.VI) and UniCredit's (CRDI.MI) Bank Austria accounted for two-thirds of this, said the person, who spoke on condition of anonymity.

The exposures, which have not been previously reported, shed some light on the financial links of Signa, which has been a major player in Europe's property industry for more than two decades.

RBI, which the person said had sharply reduced its exposure to the Signa group in recent years, declined to comment on Thursday. UniCredit also declined to comment on its exposure.

Signa did not immediately respond to an email seeking comment on Thursday. The European Central Bank (ECB), which supervises the banks, declined to comment.

On Wednesday, Signa said that Rene Benko would relinquish chairmanship of the company he founded and that it had brought in a restructuring expert to review its asset portfolio.

For years, the European real estate sector boomed as interest rates remained ultra-low, but a sharp rise in rates and building costs has driven some developers into insolvency as bank financing dries up, deals freeze and prices fall.

In recent weeks, Signa's sports retailer filed for insolvency and construction on a skyscraper was halted after the developer stopped paying its builder. Credit rating agency Fitch downgraded one Signa division to junk.

Benko, who remains Signa's largest shareholder, said on Wednesday he was certain it had "a very bright future".

Dozens of banks, insurance companies and pension funds have over the years financed and invested in Signa companies, bond sale prospectuses and a Signa presentation seen by Reuters show.

The financial links are especially strong in Austria, where Signa was founded and is headquartered.

Raiffeisen Landesbank Niederoesterreich-Wien, Raiffeisen Landesbank Oberoesterreich and Erste Group are also among the banks with exposures to Signa, the person said.

Erste said its "commercial real estate portfolio is really very sound". The other two Austrian banks declined to comment.

Banks decided to reduce their exposures after discussions with ECB supervisors, who are worried about Signa's prospects, another person with knowledge of that matter said.

A spokesperson for Austria's central bank said it had no concerns about the country's financial stability, when asked about Signa's financial position.

Austria's National Bank and its Financial Market Authority said they do not comment on individual institutions.

Signa has appointed consultants to help it conduct "a thorough review of all business areas, developing measures and drawing up an integrated concept for the group".

Restructuring expert Arndt Geiwitz who has taken on Benko's role said this week: "Signa needs calm and order at this time".

UniCredit, RBI among banks on hook for $2.4 bln in Signa loans -source

The landscape changes for the Greek banking sector after the announcement of the mega deal between Alpha Bank and Unicredit. The agreement, which was announced in the wake of the Greek economy's upgrade by S&P, officially puts Greece back on the agenda of major investment decisions and paves the way for expressions of interest from systemic investors.

These include the investors interested in acquiring a stake in the National Bank of Greece, through a process that is already underway. The Hellenic Financial Stability Fund (HFSF) welcomed the proposal, but it clarified that a tender process will be held.

The Ministry of Finance and the Bank of Greece also welcomed the development.

What does the Mega Deal involve?

The correlations in the Greek and also in the Romanian market are changing following the Alpha Bank - UniCredit mega deal.

The agreement between the two banking groups provides for the merger of subsidiaries in Romania, through which the third largest bank in the country will be created, and a commercial agreement for the distribution on the domestic market of Unit Linked products of UniCredit. For this reason the Italian group will acquire 51% of Alphalife.

However, the most critical part of this cooperation is that UniCredit submitted an offer to the Hellenic Financial Stability Fund for the 9% stake that holds in Alpha Services and Holdings.

If UniCredit does not become the preferred investor in the tender process, then the Italian bank will purchase, within 24 months, a percentage of Alpha shares corresponding to the pre-agreed amount it is going to invest. In fact, this percentage will be at least 5%. The government showed that it was aware of the agreement and welcomed it.

If the offer is accepted, it will be the first investment made by a European bank after 17 years.

Mega deal between Alpha Bank and Unicredit changing the landscape

Minister of National Economy and Finance, Kostis Hatzidakis, welcomed UniCredit decision to invest in Alpha Bank.

Hatzidakis pointed out that "the baton now passes to the Financial Stability Fund, which will proceed based on its statute and the relevant procedures provided for."

"However, the fact that a major European bank is investing in the Greek banking system after many years is a proof that both the Greek banking sector and the Greek economy have entered a path of perspective and growth," the minister underlined, adding that "this positive development is the result of systematic work which the government is determined to continue."

On his part, Bank of Greece (BoG) governor Yannis Stournaras stated:

"The Bank of Greece welcomes the agreement between UniCredit and Alpha Bank, the first major strategic agreement between a major European bank and a systemic Greek bank since the financial crisis of the previous decade.

This agreement reflects the increased credibility of the Greek economy in recent years, as this has been certified by four rating agencies so far, which have granted investment grade to Greek government bonds. It also reflects the significant progress achieved in the Greek financial system.

The two banks, UniCredit and Alpha Bank, are to be congratulated for the systematic work they did to reach this important agreement, which does not only concern Greece and Italy, but the entire eurozone."

Hatzidakis, Stournaras welcome UniCredit decision to invest in Alpha Bank

Wefox CEO Julian Teicke.WefoxWefox, the $4.5 billion German insurance technology group, has raised $55 million of fresh funding from Deutsche Bank and UniCredit, two anonymous sources familiar with the deal told CNBC.The company, which sells insurance plans via an online platform, raised the fresh cash in a debt financing deal from the two European lenders, according to the sources, who were not authorized to disclose the information publicly.The deal was structured as a convertible debt agreement, meaning that the debt will be converted into equity when Wefox next raises cash, the sources told CNBC.The fresh funding follows on from a $55 million debt round Wefox raised from JPMorgan and Barclays and a $55 million internal fundraise earlier this year.As Wefox didn't raise equity, its valuation remains unchanged at $4.5 billion.It brings the total amount of funding Wefox has raised so far this year to $160 million and marks a vote of confidence at a time when the insurtech industry faces a grim macroeconomic environment.The funds will be used to help eight-year-old Wefox accelerate its global expansion plans and double down on mergers and acquisitions, according to the sources.Unlike other insurtech platforms like Lemonade in the U.S. or Getsafe in Germany, which offer insurance directly to consumers without involving brokers, Wefox works with a network of brokers, both in-house and externally, who distribute its insurance products.Wefox is also pushing into a new model of selling insurance called "affinity" distribution. This is where the company sells its insurance software to other businesses for a subscription fee -- for example, an online car dealer adding car insurance at the point of sale.Wefox is backed by some of the best-known names in venture capital, as well as large institutional names in the traditional financial world.Its VC backers include Salesforce Ventures, Target Global, Seedcamp, Speedinvest, and Horizon Ventures, while UBS, Goldman Sachs, Mubadala Capital Ventures, Jupiter Asset Management are also existing investors.Wefox is also investing heavily in artificial intelligence, which has become a hot area of tech recently following the rise of viral AI chatbot ChatGPT.Wefox mainly uses AI to automate policy applications and customer service. The company has three tech hubs in Paris, Barcelona, and Milan dedicated to AI. ...

Deutsche Bank and UniCredit back $4.5 billion insurance startup Wefox with $55 million in fresh funds - RocketNews

Wefox, the $4.5 billion German insurance technology group, has raised $55 million of fresh funding from Deutsche Bank and UniCredit, two anonymous sources familiar with the deal told CNBC.

The company, which sells insurance plans via an online platform, raised the fresh cash in a debt financing deal from the two European lenders, according to the sources, who were not authorized to disclose the information publicly.

The deal was structured as a convertible debt agreement, meaning that the debt will be converted into equity when Wefox next raises cash, the sources told CNBC.

The fresh funding follows on from a $55 million debt round Wefox raised from JPMorgan and Barclays and a $55 million internal fundraise earlier this year.

As Wefox didn't raise equity, its valuation remains unchanged at $4.5 billion.

It brings the total amount of funding Wefox has raised so far this year to $160 million and marks a vote of confidence at a time when the insurtech industry faces a grim macroeconomic environment.

The funds will be used to help eight-year-old Wefox accelerate its global expansion plans and double down on mergers and acquisitions, according to the sources.

Unlike other insurtech platforms like Lemonade in the U.S. or Getsafe in Germany, which offer insurance directly to consumers without involving brokers, Wefox works with a network of brokers, both in-house and externally, who distribute its insurance products.

Wefox is also pushing into a new model of selling insurance called "affinity" distribution. This is where the company sells its insurance software to other businesses for a subscription fee -- for example, an online car dealer adding car insurance at the point of sale.

Wefox is backed by some of the best-known names in venture capital, as well as large institutional names in the traditional financial world.

Its VC backers include Salesforce Ventures, Target Global, Seedcamp, Speedinvest, and Horizon Ventures, while UBS, Goldman Sachs, Mubadala Capital Ventures, Jupiter Asset Management are also existing investors.

Wefox is also investing heavily in artificial intelligence, which has become a hot area of tech recently following the rise of viral AI chatbot ChatGPT.

Wefox mainly uses AI to automate policy applications and customer service. The company has three tech hubs in Paris, Barcelona, and Milan dedicated to AI.

Wefox raises another $55 million from Deutsche Bank and Unicredit

UniCredit, led by CEO Andrea Orcel, has formed a strategic partnership with Alpha Bank, marking a significant development in the European banking sector post-financial crisis. The merger, reported today, involves UniCredit investing €300 million to combine its Romanian operations with those of Alpha Bank, leading to the creation of the third-largest bank in Romania. This move is expected to boost UniCredit's net profit by €100 million.

Alpha Bank will retain a minor 9.9% share in the new entity, while UniCredit will control the majority stake. As part of the merger agreement, Alpha Bank is set to receive a cash consideration of €300 million (USD1 = EUR1.0625), subject to post-due diligence adjustments.

The transaction was valued at 1.2-1.3 times of Alpha Bank's net assets, resulting in an estimated valuation of between €500 million and €550 million. This valuation was reported by Ziarul Financiar and detailed in presentation materials.

In addition to this merger, UniCredit has announced plans to acquire a 9% stake in Alpha Bank from the Greek state, valued at approximately €270 million. If its bid to the Hellenic Financial Stability Fund (HFSF) fails, UniCredit has prepared a contingency plan to strengthen its presence in the Greek banking sector through open market acquisition of up to 5% of Alpha's shares over two years.

This unexpected transaction was exclusively advised by JPMorgan and signifies a major step forward for both banks.

Drawing from InvestingPro's real-time data and valuable tips, it's clear that UniCredit and Alpha Bank's strategic partnership is a significant move in the banking sector.

InvestingPro Tips highlight that UniCredit (0RLS) has been aggressively buying back shares and its revenue growth has been accelerating. This aligns well with the company's current strategic acquisitions. Furthermore, despite some analysts revising their earnings downwards for the upcoming period, the company has consistently increased its earnings per share, which is a positive sign for investors.

On the other hand, Alpha Bank (ACBr) has been experiencing some volatility in its stock price movements, and analysts predict that the company will be profitable this year. However, it's important to note that the bank has been burning through cash quickly, which could be a concern for investors.

From the InvestingPro Data, UniCredit boasts a market cap of $43940.04 million and a low P/E ratio of 4.7 as of Q3 2023. The company has also seen impressive revenue growth of 53.92% over the last twelve months as of Q3 2023. Alpha Bank, on the other hand, has a smaller market cap of $3667.87 million and a higher P/E ratio of 7.35 as of Q2 2023. The bank has experienced a substantial revenue growth of 158.15% over the last twelve months as of Q2 2023.

In conclusion, both banks have their strengths and potential areas of concern. It's recommended for investors to further explore these metrics and additional tips available on InvestingPro platform.

UniCredit and Alpha Bank merge to form Romania's third largest lender By Investing.com

November 3 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Friday it has approved a senior secured loan of up to 7 million euro ($7.5 million) to Bosnia's UniCredit Bank Mostar [SAJ:ZGBMR], part of Italy's UniCredit Group, to back local small and medium enterprises (SMEs).

The funds will be used for on-lending to SMEs for improving their competitiveness and trade potential via targeted investments in sustainability practices and the adoption of internationally recognised quality standards, the EBRD said in a project summary document.

The loan, provided under the FIF SME Go Green Programme, is expected to increase local green economy investments and green agribusiness supply chains, as well as promote more equitable access to climate and other finance to women-led SMEs.

The bank will aim to deliver at least 70% of the proceeds to Green Economy Transition (GET) eligible projects, the EBRD said.

UniCredit Bank Mostar is based in the Federation, one of two autonomous entities that form Bosnia and Herzegovina. UniCredit Group has another bank in Bosnia, UniCredit Bank Banja Luka, headquartered in the other entity - the Serb Republic.

EBRD to extend 7 mln euro loan to Bosnia's UniCredit Bank Mostar

UniCredit had gained 1.3% by 0756 GMT, bringing year-to-date gains to 74%, comfortably making it the best performer within the euro STOXX bank index, followed by two other Italian lenders, BPER Banca and Banco BPM, which are up 55 and 37%, respectively year to date.

Giving further impetus to UniCredit's rally was the bank's surprise announcement on Wednesday to bring forward up to 2.5 billion euros of its 2023 share buyback plan.

"This move comes largely unexpected and sends a message of confidence about the next few months despite the uncertain outlook: we expect UCG will continue to outperform in the near to medium term," wrote Deutsche Bank analysts in a note.

(Reporting by Danilo Masoni; Editing by Amanda Cooper)

UniCredit cements lead as top-performing euro zone bank stock

UniCredit S.p.A. is one of the leading European banking groups. Income breaks down by activity as follows: - corporate, investment, finance and market banking (53.7%): leasing, factoring, stock transactions, participation in the rate, exchange, stock and derivative markets, stock exchange intermediation, etc.; - retail banking (46.3%). At the end of 2022, the group managed EUR 511.9 billion in deposits and EUR 524.9 billion in loans. Products and services are marketed through a network of 3,175 branches located primarily in Italy (2,986). Income (including intragroup) is distributed geographically as follows: Italy (43.5%), Germany (24.3%), Central Europe (16.6%), Eastern Europe (9.6%) and Russia (6%).

UNICREDIT SPA  :  Deutsche Bank reiterates its Buy rating

UNICREDIT SPA  :  UBS reiterates its Buy rating

MILANO, Sept 26 (Reuters) - UniCredit said on Tuesday it had mandated Egon Zehnder and Spencer Stuart as headhunters to support the board in identifying candidates to be included in the slate of nominees current directors will put forward to appoint their successors.

The current board is up for renewal next spring.

In June UniCredit Chief Executive Andrea Orcel said he would be "definitely up for more," when asked about whether he would seek a new mandate at the helm of the Italian bank.

(Reporting by Gianluca Semeraro; editing by Valentina Za)

UniCredit picks headhunters to advise board on own slate of nominees

According to the latest analysis by UniCredit, the oil market appears on the brink of a supply crunch, with Brent prices expected to hover just under USD 100/bbl by the close of 2023, only to retreat towards USD 90/bbl in the first half of 2024 when OPEC+ potentially loosens the taps.

The present Brent oil price sits at 90.76 in US Dollars, suggesting that investors could witness marginal gains if prices ascend towards the predicted peak of just below 100 OIL/USD before they start to wane.

OPEC+'s reduced oil supply since the dawn of 2023 has played a pivotal role in the market dynamics.

"Since the beginning of 2023, OPEC+ has removed around 2.5mb/d of supply from the market that are likely to gradually come back in 1H24" says Edoardo Campanella, International and Energy Economist at UniCredit Bank.

The existing disparity between oil supply and demand is stark, with a supply lag of around 1.5 million barrels per day (b/d).

Increased production by countries like the US and Brazil has somewhat mitigated this shortfall.

"This supply shortage would be larger if the US and Brazil had not surprised the market by pumping more than expected" the strategist adds.

Russian oil exports have maintained stability, anchoring global flows.

"Russian oil exports have remained broadly stable, at around 7.5mn b/d," says Campanella.

Yet, the intricacy surrounding the G-7 price cap on Russian oil hints at a lack of significant impact on Moscow's oil revenues.

"Therefore, in our view, the G-7 price cap on Russian oil has not been able to decrease oil revenues for Moscow due to its complexity and a lack of transparency concerning its implementation" the analyst adds.

On the global scale, oil demand showcases resilience and could touch 102mn b/d in 2023, which eclipses pre-pandemic figures.

Furthermore, despite economic tumult, China's oil hunger hasn't subsided.

"Despite the current headwinds faced by the Chinese economy, oil demand in China looks unaffected; it reached a historic monthly high of 16.7 mn b/d in July," says Campanella.

Yet, refineries face the challenge of satiating the soaring demand, especially for diesel.

Existing global capacity losses, coupled with external dynamics, strain the supply chain.

"Refiners are struggling to meet increased demand, especially for diesel, as a result of losses of global capacity of near 5% over the last few years as the global energy transition has accelerated," says Campanella.

Elevated product cracks and refining margins underscore the ramifications of this strained environment.

"Surging product cracks and refinery margins are near all-time highs" the analyst adds.

Oil Price Forecast 2023-2024: "to Hover Just Under USD 100/bbl" By Year-End Say UniCredit

October 3 (SeeNews) - UniCredit Bulbank has raised its projection for Bulgaria's economic growth in 2023 to 1.9%, up 0.2 percentage points (pp) from its June forecast, due to somewhat stronger-than-expected year-to-date macroeconomic indicators and improved economic prospects for the country.

The lender, however, slightly lowered its earlier forecast for Bulgaria's gross domestic product (GDP) growth in 2024, to 2.8% from 3.0% seen in June, UniCredit Bulbank said in its September macroeconomic update.

The GDP forecast for the next year has been reduced because of a downward revision in Bulgaria's export volumes. This aligns with the expected economic slowdown in the eurozone countries, as indicated in the bank's new baseline scenario.

Yet, the improved year-on-year performance in 2024 will be primarily driven by decreasing inflation, an increase in investments, and a reduced pace of inventory reduction, which has been a significant factor contributing to the economic slowdown in 2023.

Private consumption is expected to continue to rise in 2024, on the back of slower consumer price increases, which will also drive 4.3% real growth in salaries next year against 2.2% in 2023.

The bank affirmed its June projection for Bulgaria's consumer price inflation to average 9.8% in 2023, slowing to 4.0% on average in 2024, or 0.1 pp less than projected in June. Headline inflation is forecast to drop to 3.4% at the end of December next year.

Gross fixed capital formation, or investments in long-term, physical production assets contributing to economic growth, will play a key role in the acceleration of the real economy in 2024, UniCredit Bulbank said.

"Provided that the current political stability persists, we expect real investment growth to accelerate to 10% per year for 2024 as a whole. We expect most of this acceleration in the growth of the gross formation of fixed capital to come from the public sector, along the lines of the improved absorption of funds under the Recovery and Resilience Plan," the lender noted.

Bulgaria is poised to attract increased foreign investment in its private sector, benefiting from disruptions in traditional supply chains caused by the war in Ukraine. The conflict has led to the need for relocating and expanding production capacity in allied countries within certain sectors of the global economy. Moreover, the ongoing surge in new residential construction projects will further boost private sector investment.

With just one month remaining until Bulgaria's local elections, there is a noticeable reduction in societal polarisation. This increases the likelihood of the power-sharing rotational government remaining stable and being able to pursue long-term goals, including the fight against corruption and the advancement of EU integration, including Bulgaria's planned accession to the Schengen Area and the eurozone. UniCredit Bulbank AD is among the biggest banks in SEE. You can download our SEE Top 100 ranking

UniCredit Bulbank lifts Bulgaria's 2023 GDP growth f'cast

The latest Central and Eastern Europe (CEE) foreign exchange forecasts have remained in fact at UniCredit, in their FX monthly outlook updated for October 2023.

The analysts predict a weakening of the Polish Zloty (PLN) against the Euro (EUR), a supportive backdrop for the Czech Koruna (CZK) due to postponed rate cuts until the first quarter of 2024, and an unpromising outlook for the Turkish Lira (TRY) despite potential rate hikes, primarily propelled by ascending inflation in the lead-up to the upcoming March local elections.

"We have kept our CEE FX forecasts unchanged and expect further PLN weakness against the EUR, while the CZK is likely to be supported by the delay in rate cuts to 1Q24. Rate hikes are unlikely to halt TRY weakening as inflation rises ahead of local elections next March," says Roberto Mialich, FX Strategist at UniCredit.

Delving into the details, Central banks across the CEE have evidently upheld a cautious demeanour, particularly manifest in recent rate-setting outcomes from Hungary and Czechia, which concluded with a decidedly hawkish orientation.

The National Bank of Hungary (NBH) drew attention to the ascendant risks to inflationary outlooks and judiciously abstained from pledging to a precise pace of cuts in the ensuing phase of their rate-cutting cycle.

Notably, this strategic caution is enveloped by an alignment of the entire monetary toolkit with the policy rate, stably posited at 13%.

"The NBH was flagging the dominance of upside risks to the inflation outlook and refrained from committing to the pace of cuts in the next phase of the rate-cutting cycle, as the whole monetary toolkit was aligned with the policy rate at 13%" says Mialich.

Should the Hungarian Forint persist in its depreciation, and absent a dovish shift in core market yields, the NBH may consider moderating the rate of cuts to 50 basis points per month or even pause in October.

This potential strategy might surprise markets with its hawkish disposition, offering support to the Hungarian Forint.

The unanimous decision by the Czech National Bank (CNB) to retain rates, coupled with ensuing commentary, insinuates that board members maintain a more hawkish stance on the interest-rate trajectory than what the baseline scenario indicated, reinforcing predictions that rate cuts will not commence before 1Q24, a factor potentially underpinning the Czech Koruna.

"The CNB's decision to keep rates on hold was unanimous and comments from the press conference following the rate decision suggest that board members are aligned with a more hawkish view on the interest-rate path than the baseline scenario indicated by the staff," says Mialich.

With respect to the Polish Zloty (PLN), it faces pressing factors such as narrowing carry, adverse real rates, and fiscal risks, all of which could apply downward pressure, constricting the manoeuvrability for rate cuts.

The recent expansion in 2Y IRS differentials against the Euro may somewhat buttress the Czech Koruna and Hungarian Forint.

Nevertheless, the Polish Zloty, being the least augmented by positive carry, could encounter further vulnerability should the National Bank of Poland (NBP) fail to solidify credibly.

"Hints of further cuts in 4Q23 may add to pressure on the PLN, considering that inflation is expected to hover around 7% until 4Q24, keeping real rates in negative territory," adds Mialich, presenting a conclusive yet cautious note on the Polish Zloty's economic position amid the present factors.

Turkish Lira, Polish Zloty And Czech Koruna (CEE) Forecasts Updated For October 2023: UniCredit

We'll see what the real impact of the tax on Intesa Sanpaolo and UniCredit could be, considering in particular if the dividend will be hurt.

Another windfall tax on extra profits. After the big oil majors, major banks are now the target.

In the night of Aug. 7, 2023, the Italian government announced it will apply a windfall tax on the extra profits the Italian banks are earning thanks to rising interest rates.

As a consequence, the whole Italian banking sector, which over the past year is up 50% vs. the 20% gains made by the European banking sector, is tanking, with the two main Italian banks bleeding: Intesa Sanpaolo (OTCPK:ISNPY) is down 8%, and UniCredit (OTCPK:UNCRY) losing more than 5%. At the time of writing, two days later, there's a little rebound, but still not strong enough to offset this drop.

What's the impact of this new tax? How will shareholders be affected by it? In this article, I will give my take based on the available data.

As reported by the media, Italy will apply, only in 2023 and to be paid by June 30, 2024, a 40% tax on profits coming from net interest margin, which is the income coming from the spread between lending and deposit rates. Under this tax, 40% of the NIM earned by Italian banks in 2022 or 2023 (depending on the bigger sum between the two). The law has been approved by the government, but it has to be voted by the Parliament. Therefore, we don't have yet a final draft. However, it seems likely that there will be two thresholds set to trigger the tax: 5% for 2022 and 10% for 2023. This means that if banks had a NIM growth above 5% in 2022, the income made above this threshold will see a 40% tax withdrawal. The levy is a one-off, as stated by the government. It's estimated to give almost €5 billion to the state.

Immediately, many reactions considered this tax to come out of the blue and there were mixed reactions between the surprise of seeing the supposedly "bad guys" - aka, the banks - finally paying a part of their profits and the worries that this act could actually backfire and generate further chaos.

As a result, after a whole day of debate, on the night of Aug. 8, 2023, the Italian Department of The Treasury issued a note giving some reassuring detail on this tax. Here's the translation of the note:

The measure proposed by the Minister of Economy and Finance, shared and approved by the Council of Ministers, comes in the wake of existing regulations in Europe on bank extra margins. At the same time, the measure, for the purpose of safeguarding the stability of banking institutions, also provides a ceiling for the contribution, which cannot exceed 0.1 percent of total assets. In this regard, it is recalled that the taxable base of this tax is determined by the greater value between the amount of the interest margin under item 30 of the income statement, prepared in accordance with the formats approved by the Bank of Italy, relating to the year prior to the year ending Jan. 1, 2023, that exceeds the same margin by at least 5 percent in the year prior to the year ending Jan. 1, 2022, and the amount of the interest margin under item 30 of the income statement prepared in accordance with the formats approved by the Bank of Italy, relating to the fiscal year prior to the one in progress on Jan. 1, 2024, that exceeds the same margin by at least 10 percent in the fiscal year prior to the one in progress on Jan. 1, 2022. Finally, it is noted that banking institutions that have already adjusted rates on deposits as recommended last Feb. 15 in a specific note from Bankitalia, a recommendation later recalled by Minister Giorgetti at the ABI assembly last July 5, will not have significant impacts as a result of the law approved yesterday.

So, it seems that the situation has become a little clearer, enabling us to do some math and understand the real impact of this measure on Italian banks. In this article we will only deal with the two major banks. Shareholders of other Italian banks may just follow along our reasoning to see how to deal their own specific situation.

Before we move, let's summarize the main data we will need for our valuation.

First of all, all main Italian banks recently reported very strong results that led many of them to give higher guidance.

Considering the two banks we are talking about, let's take a look at two slides from the respective 1H23 results presentation.

Intesa Sanpaolo wasn't shy about the outstanding results achieved in the first six months of this year, which brought the bank back to its highs before the Great Financial Crisis of 2008.

If we look at the mix leading to the operating income, we clearly see the big contribution coming from net interest income: €6.8 billion out of €12.4 billion (54%).

During the earnings call, Intesa Sanpaolo also said it expected its net interest income to come above €13.5 billion for this year with further growth to come in the next two years. Therefore, the bank upgraded its 2023 net income guidance to "well above €7 billion," with this being a floor the upcoming years. Investors celebrated this report because Intesa Sanpaolo has a dividend policy which pays 70% of its net income. With these numbers, this is a bank with a previous dividend yield is 11%, with potential additional capital distributions to be elevated year-by-year.

UniCredit reported a similar situation, highlighting how the main driver of revenue growth was net interest income.

During the earnings call, UniCredit admitted that "we continue to experience a positive net interest dynamic driven by higher loan rates and still low deposit beta." In other words, the bank said it is not raising rates on deposits at the same speed it is raising loan rates.

UniCredit also said it expects a FY 2023 net interest income of at least €13.2 billion. In addition, it disclosed how its net interest income sensitivity for a one percentage point of deposit beta is about €130 million at current rates and deposit volume assumption. For every rate increase of 50 bps, the bank will see a positive impact of about €300 million.

I think these two slides show what is going on: Indeed, these banks are reporting record profits because the gap between loan interest rates and deposit rates.

Scanning through the quarterly reports of the past two years and a half, I put together the data of the net interest income earned by the two banks.

We see how three quarters ago, around 4Q of 2022, net interest income began to quickly increase for both banks. This shows us even better where the issue lies: Customers are being penalized because they are not yet awarded high rates on deposits. In the meantime, banks benefit from the same environment that's making many households uncertain about their future.

Now we can finally calculate the impact this tax might have on the two bank's profits.

Looking at the data taken from the past two annual reports and the forecast we can make for FY2023 results, given the already reported 1H23 results, we have what is show above.

Intesa could have €13.8 billion of net interest income, which will lead to a net income of €7.85 billion. UniCredit will see its net interest income at €13.2 billion, but it should beat Intesa in when considering its net income, which could come in close to €8.5 billion.

We have to consider total assets, too, because that will determine the value of the tax cap. One word on why total assets are declining for both banks. If we look at the balance sheet of both companies, the main reason for this decline is the reduction of gross loans over the past two years, which I think is understandable, given the high rate environment.

The first thing we need to do now is to understand whether both banks will pay the tax on the 2022 or the 2023 extra profits. At the end of FY2022, Intesa saw its net interest income grow by 12.6% or €1 billion. At the end of this year it should see its net interest income grow by 53.3% or €4.8 billion. Intesa will pay the 40% tax on this year's expected profits.

The same is true for UniCredit. Last year it saw its NII grow by 16.9% or €1.5 billion. This year, the expected growth is 24.3% or €2.6 billion.

Both banks have results that will trigger the tax in 2023. Therefore we will see the impact of the tax on the 2024 income statement.

How much will both banks pay?

Intesa will see its €4.8 billion taxed and it will have to pay €1.9 billion. However, this exceeds the tax cap, which should be around €945 million for Intesa. Therefore the tax will actually be a 20% tax on the extra profits.

The same happens for UniCredit. It should pay €1 billion, but since its tax cap should be around €825 million, it will end up paying a 32% tax on the extra profits.

There's actually one factor we can't really estimate but that's in favor of these banks. The Italian government has anticipated it will use this tax to help Italian households pay their mortgages. Therefore, part of this money will go back into the pockets of the banks, just like it happened for the windfall tax on oil companies that were used to help households pay their bills.

Italian banks are good dividend payers. Since the Great Financial Crisis and the Sovereign Debt crisis, they have worked to have stronger balance sheets and high CET1 ratios. Intesa has also reached the zero-NPL bank status.

So, how much will this tax impact the hefty checks these banks pay to their shareholders?

Intesa's dividend policy aims at paying in the form of dividends 70% of the annual net income. The bank will evaluate year-by-year if it will add other returns. For example, the bank finished back in April a €3.4 billion buyback program.

UniCredit has been also on a run since the arrival of the new CEO Mr. Orcel, who announced a massive program to make the bank a very profitable one, with the ability to return a lot of cash to shareholders.

Currently, UniCredit targets to pay 35% of its profits in the form of dividends, while aiming at €16 billion total distribution from 2021 to 2024 through a mix of dividends and share repurchases. Currently, if we sum up buybacks and dividends, UniCredit already returned almost €12 billion, leaving at least €4 billion for next year.

In any case, Intesa will end up with a net income after the windfall tax of €6.9 billion. This means it will probably pay €4.8 billion in dividends, which means that it will hand out €0.26 per share, which is an 11% yield.

Unicredt could end this year with a net income after the windfall tax of €7.6 billion, which gives us a €1.47 dividend per share, which is equal to a 6.6% yield, not counting buybacks. UniCredit will use around €2.7 billion for its dividend, leaving at least €1.3 billion available for a further buyback. This is an additional 3% return at the current share price of €22.4.

Last year, Intesa paid a dividend of €0.164 per share, while UniCredit paid €0.99 per share.

The math is clear: Investors will end up just fine. Actually, investors may profit from the current volatility to pick up some shares of solid banks with high returns.

Italian Windfall Tax: The Impact On Intesa And Unicredit (OTCMKTS:IITSF)

August 11 (SeeNews) - Italian banking group UniCredit said that it increased its net profit from operations in Bosnia and Herzegovina by 51% year-on-year to 42 million euro ($46.2 million) in the first half of 2023.

UniCredit's two Bosnian units booked profit before tax of 51 million euro combined in the first half of the year, up 37.3% on the year, the group said in an interim financial statement last week.

The Bosnian units' net interest income rose 26% on the year, reaching 63 million euro in January-June, while the net fee income added 6.1% to 33 million euro.

Customer deposits edged up by an annual 3.1% to 3.4 billion euro in the first half of the year, whereas loans fell 1.7% to 2.2 billion euro.

UniCredit Group has a banking unit in each of Bosnia's two autonomous entities - the Serb Republic and the Federation.

UniCredit's H1 net profit in Bosnia grows 51% y/y

August 11 (SeeNews) - Italy's UniCredit Group said it booked a consolidated adjusted net profit in Bulgaria of 192.7 million euro ($211.9 million) in the first six months of 2023, compared to a net profit of 93.8 million euro a year earlier.

UniCredit's first-half pre-tax profit in Bulgaria also more than doubled on the year, to 220.1 million euro, the banking group said in an interim financial statement last week.

Net operating profit rose to 237.3 million euro in January-June from 115.3 million euro a year earlier, as a result of the lender releasing 16.7 million euro worth of loan loss provisions. By contrast, in the first six months of 2022, it booked loan loss provisions of 28.6 million euro.

Net interest income of UniCredit in Bulgaria rose to 210.4 million euro in the review period from 137.4 million euro a year ago. Net fees increased to 92.45 million euro from 86.3 million euro, while net trading income soared to almost 15 million euro from roughly 2 million euro last year.

Total revenue from UniCredit's Bulgarian operations came in at 312.1 million euro in the six months through June, against 227.6 million euro in the same period of 2022.

The group widened its operating costs in Bulgaria to 91.5 million euro from 83.7 million euro, with payroll expenses rising by an annual 6.8% to 48.5 million euro.

Customer loans increased by over 17% on the year to some 8.5 billion euro, while customer deposits added 14% to 12.1 billion euro.

UniCredit Bulbank was Bulgaria's third largest lender by assets as at the end of June, according to the most recent central bank data.

UniCredit's Eastern Europe segment also contributed to the Italian group's strong first-half performance, with adjusted net profit almost doubling to 636.4 million euro from 315.8 million euro a year ago. Net operating profit for Eastern Europe went up to 832.2 million euro from 452.9 million euro a year earlier.

UniCredit's Eastern Europe segment covers banking and financial activities in Bosnia & Herzegovina, Bulgaria, Croatia, Romania and Serbia.

UniCredit more than doubles H1 net profit in Bulgaria

August 11 (SeeNews) - Italy's UniCredit Group said its net profit from operations in Slovenia more than doubled to 28 million euro ($31 million) in the first half of 2023 from 13 million euro in the like period of last year.

UniCredit Group's profit before tax in Slovenia went up to 35 million euro from 16 million euro in January-June 2022, the banking group said in an interim financial report last week.

Revenue grew 37.4% on the year to 52 million euro in the period under review, while operating costs were up 1.2% on the year to 22 million euro, resulting in the operating profit soaring to 38 million euro from 14 million euro.

The net interest income went up by an annual 83.5% to 40 million euro, while net fees and commissions income dropped to 12 million euro from 13 million euro.

UniCredit Slovenian unit's H1 net profit more than doubles

August 11 (SeeNews) - Italy's UniCredit Group said its consolidated net profit from operations in Romania rose 65% year-on-year to 133 million euro ($146.2 million) in the first six months of 2023.

Profit before tax climbed by an annual 60% to 165 million euro in the year's first half, UniCredit Group said in an interim financial statement last week.

The group's net interest income generated by its Romanian unit rose by an annual 25% to 202 million euro during the January-June period. Net fee income rose 14% to 76 million euro in the review period.

The volume of loans increased by an annual 6.9% to 7.7 billion euro in the six months through June, while deposits from customers added 8.9% on the year to 9.2 billion euro.

UniCredit Bank operated 141 branches in Romania at the end of June.

UniCredit profit in Romania grows 65% in H1

The date of August 8th will probably be one for the history books when it comes to Italian banking. In a seemingly extraordinary move, the center-right government of PM Giorgia Meloni approved a windfall tax on the country's lenders, suddenly erasing about 10% from the market capitalizations of the listed ones on huge selling volumes. Even if UniCredit S.p.A. (OTCPK:UNCRY)(OTCPK:UNCFF) fared a bit better than other top banks Intesa Sanpaolo (OTCPK:ISNPY)(OTCPK:IITSF), BPER Banca (OTCPK:BPXXY) and Banco BPM (OTC:BNCZF)(OTCPK:BNNCY), none of them could be immune to the consequences of a new levy.

[Above graph shows corrections for the primary listings on the Italian Stock Exchange]

At the opening of the next trading day, however, all titles partially bounced back on the news that the Italian Finance Ministry was already working on amendments to the first draft, reducing the potential tax burden on the banks. But clumsy actions here obviously led to a market panic that, in my opinion, could have been partly avoided.

Here is why.

Those who follow me on Seeking Alpha and read my recent coverages of both UniCredit and Intesa Sanpaolo should have known that the government passing a windfall tax was likely. Pardon me for the vanity of quoting myself, but here is what I had to write on the matter in June and July:

[...] the risks remain elevated. In March, I discussed the possibility that the Italian government could implement a populistic measure like a mortgage payments jubilee to harm bank profits. While that particular risk seems very low now, Italian media has recently started reporting that discussions could be ongoing regarding levying potential surtaxes on bank profits (June 27, 2023)

With Italian households holding up well to the increase in mortgage rates and banks showing record Q1 profits, Italian media is floating the idea that the government could instead impose a surtax on bank profits. (July 13, 2023)

It is impossible to believe the sell-off came from the panic caused by this being a surprising event. Moreover, Italy was not the first country to go down this path. With Spain and Hungary already enacting similar laws, more countries in the EU could follow. In my view, the main problem was the irrationality of the initial government plans.

As divulged by the media, the initial plans looked at a 40% tax on extra profits reaped from higher net interest margins (NIM) in 2022 and 2023. The "extra profits" are defined as the yearly NIM increases exceeding 3% for 2022 and 6% for 2023 (subsequently revised at 5% and 10%). It is frankly worrisome how the Italian government seems at ease in deciding how much is a "normal" profit and how much is "extra" in a given year. What anchors such threshold of "exceptionality"? If the government wanted something done, I believe a simple raise of the statutory tax rate would have had far better optics.

The initial plan looked at capping the tax at "up to 25% of the book value of equity," putting UniCredit and Intesa, the two biggest banks, (potentially) on the hook for over €10 billion each. In essence, there was no cap. Despite the Italian government claiming to be seeking to raise €2 - €3 billion, private sector experts quickly assessed the extra tax revenue would have been more than double that amount. According to JP Morgan (JPM) preliminary estimates, UniCredit could have ended up shelling out €0.8 billion relative to its FY23 results, and Intesa Sanpaolo €2.0 billion!

Fortunately, in the second circulated draft a few hours later, the cap methodology was revised to "0.1% of the net assets," and a mini-rally followed. However, not all banks' shares recouped the losses, with BPER bank suffering the worst consequences among the major names. Nevertheless, the new cap provides investors more clarity about the impact and a significant "discount" to the banks: the hit should not exceed €0.4 billion for UniCredit and €0.7 billion for Intesa. At the same time, under the revised limit, it would seem that the new tax could still raise the stated range of €2 - €3 billion.

Despite the (partial) U-turn, several of the most prominent Italian businesspeople quickly pointed out that the government is treading on thin ice with this measure, with the most critical ones, like Corrado Passera, CEO of Illimity Bank and former Italian Minister, openly questioning its credibility.

Indeed, the issue was also brought forward by Italian MP Alessandro Cattaneo, who commented that "Italy is at risk of losing all its [international] credibility" with this windfall tax.

Buy why did the government decide to come up with the tax? According to government sources, the tax's primary purpose will be to fund relief measures for mortgage holders affected by the significant increase in variable interest rates. In other words, a bail-out for those who committed moral hazard in the first place. Italian banks have always offered fixed interest rates on mortgages, and only a few years back, prospective homeowners could lock in 20-30 years' mortgages with a 1.5% fixed interest rate (or even less). But those who were opting for variable could pay less than 1%. The tide has turned, and those who bet on negative rates holding out forever lost. Game over? Not so fast, because the old socialist state mindset strikes again, putting the costs of reckless behavior on the collectivity.

While it is certainly within the prerogatives of any government to re-modulate its fiscal levers, I'd argue that to avoid spooking the markets, it is undoubtedly necessary to impose tributes that are not ill-conceived, are not set arbitrarily, and benefit those in need, rather than speculators who lost their bets.

Against the challenging political backdrop, it is a real blessing that the private sector in Italy continues to thrive. More often than not, my first-hand experience with Italian companies showed me solid, well-run players, frequently superior in productivity to their EU peers. I often contemplate this might be economic Darwinism in action, these companies being survivors of a public system of bureaucratic oppression and fiscal persecution.

UniCredit is no exception. Under the leadership of Andrea Orcel, the bank has shifted gears and transformed itself into one of the best-performing financial institutions in Europe. The recent 1H23 numbers speak for themselves: 21% RoTE, 39% Cost / Income ratio, 16.6% CET1r, with low NPEr at 2.6% and ample liquidity coverage and loan/deposit ratios. These are undoubtedly strong numbers. To prove my point, let me compare them with foreign European banks (to some extent) operating in Italy. Dutch ING Group (ING) reported 1H23 Cost / Income of 54%, CET1r 14.9%, and RoTE 17.3%. French BNP Paribas (OTCQX:BNPQF)(OTCQX:BNPQY) 1H23 Cost / Income ratio stood at 64%, CET1r of 13.6%, and RoTE around 10%. Each bank has its own nuances, and three ratios are no substitute for a complete analysis. Still, there should be little doubt that UniCredit is firing on all cylinders and producing great operational results.

When I last covered UniCredit in June, the company still pointed investors to FY23 earnings of €6.5 billion. In my analysis, I tried to divide such results and suggested a potential quarterization that looked at a net profit of €1.9 billion in 2Q23 before a substantial drop in 2H23:

At that time, I already knew the company was lowballing its guidance and explicitly said so, but I wanted to understand the implied YoY changes under such a scenario. After posting a Q2 profit of €2.3 billion, the net profit for 1H23 stands at €4.4 billion. UniCredit has modestly raised its FY outlook to "at least" 7.25 billion, implying H2 profits greater than €2.9 billion. With €3.1 billion posted in 2H22, the company seems again conservative by forecasting a YoY decrease-to-flat earnings in the back half of the year. Half of Q3 is already under the belt, and I believe UniCredit will once again post solid numbers vs. LY. The company earned €2.5 billion in NII in 3Q22, but I expect that figure to increase by at least €1 billion for the current year. That alone should be able to flow directly to the bottom line and boost 3Q23 earnings to €2.3 billion, roughly the same level as Q2.

The outlook remains, however, clouded for Q4: the EU manufacturing PMI readings aren't great, with six consecutive declines already. Italy's GDP decreased by 0.3% in Q2, and another negative quarter would officially signal a recession. UniCredit seems to be preparing to hit its guidance even in the face of an upcoming mild downturn, with the potential for higher provisions in Q4. Still, it would only need about €300 million in earnings to hit the guidance (LY: €1.5 billion even after new provisions for €0.5 billion).

After running the numbers and modeling an additional €0.6 - €0.8 billion in provisions against non-performing loans and €0.44 billion for the windfall tax (the theoretical max cap as of today), I still expect the company to post 2H23 profits of about €3.2 - 3.3 billion. Anything short of a swift and deep recession, and I believe UniCredit will post FY23 net profits of about €7.5 billion, beating its latest guidance, even after the new windfall tax hit.

UniCredit is changing hands in Milan at (about) €22.5 per share (1 UNCRY ADS = 0.5 UCG) for a market cap of €43.5 billion. That equates to a fwd P/E multiple of approximately 5.8x. With TBVPS at the end of 1H23 slightly over €30 per share, shares trade at 0.75x P/B.

With top efficiency achieved, RoTE above 20%, and C/I below 40%, I see no reason for such a significant discount. Considering a potential downturn and earnings cyclicality, I am somewhat cautious about assigning high valuation multiples to UniCredit, but a 7x P/E and 0.9x P/B should do, pointing at approximately 20% upside to €27 per share. The company remains shareholder-friendly and plans to pay out most of the FY23 earnings through dividends and buybacks.

After a +130% one-year return, the days of UniCredit shares being an excellent bargain trading at less than 0.5x TBVPS are gone. As I warned in my previous analysis, investors should remain alert about the new earnings cycle approaching a peak. That said, I continue to see relative value in UniCredit. Shares are still cheap vs. EU peers. The already mentioned ING and BNP are trading at 7x and 8.3x fwd EPS, respectively.

Except for Mr. Passera, Italian bankers have refrained from comments on the windfall tax issue, which might be the wise thing to do at this stage. The Italian parliament is now closed for holidays for four/five weeks in August, and there is no telling when the tax will be signed into law. By the time the new tribute completes the legislative process, it could be amended further and look different from the drafts.

From the latest reads, the tax impact should be manageable. Hence, I see no reason to change my BUY recommendation for UniCredit. UniCredit is a well-run institution that has completed its turnaround and reached high levels of operational efficiency. Besides another hasty government intervention that criminalizes free enterprise and profits, the main bearish point seems to be a quick interest rate drop that would significantly reduce NII levels, an excellent historical example of this happening being 2008.

However, with inflation remaining high in the Eurozone, the ECB seems to have little choice but to keep interest rates in place or raise them further for now. As long as the "higher of longer" fundamental assumption holds, so does the bull case for UniCredit.

UniCredit (UNCFF): Still A Buy Despite The Windfall Tax Hit

Economists at UniCredit Bank forecast an additional Turkish central bank's policy rate hike by 1.5 percentage points, bringing the rate to 19.00%.

This comes on the heels of significant 9 percentage point hikes observed over the last two central bank meetings.

Simultaneously, the prevailing mood is one of caution, with apprehensions that the Turkish Lira (TRY) may experience pressure, potentially nearing its year-to-date low against the US Dollar.

"In its latest move before the MPC meeting, the central bank introduced new measures, which primarily aim to trigger a shift from an FX-protected TRY deposit scheme to conventional TRY deposits," says Tullia Bucco, Economist at UniCredit Bank.

"These measures will likely imply higher TRY deposit and loan rates," she adds.

This strategy signifies a dual approach from the Central Bank of the Republic of Turkey (CBRT) - focusing not just on direct policy rate hikes, but also deploying measures to temper loan growth selectively.

Given this layered approach, the CBRT might be signalling potential for milder rate hikes in future.

"The tightening delivered via non-policy rate tools might encourage the CBRT to opt for a smaller hike in its policy rate," Bucco notes.

Despite the anticipation of continued monetary tightening by the CBRT, there is a palpable uncertainty surrounding its pace and the potential repercussions on the Turkish Lira (TRY).

Current market sentiments suggest an expectation of a significant hike, but the reality might differ.

"The CBRT meeting outcome is the other main event of the day: the bank is widely expected to continue its tightening cycle, but investors might be disappointed if it hikes at a lower speed than markets expect," Bucco observes.

Supporting this sentiment, UniCredit Bank's projections indicate a potential increase in the one-week repo rate by 150 basis points, reaching 19.00% from its current 17.50%.

This forecast is conservative compared to wider market predictions, which are skewed towards a heftier 250 basis point surge.

Yet, the real concern isn't just limited to figures.

Discrepancies between CBRT's actions and market anticipations could trigger reactions in currency valuations.

"The CBRT is likely to flag that further tightening remains in the offing, but the TRY might suffer, probably re-approaching the YTD low of 27.3381 against the USD reached on 4 August if we are right and thus, the Turkish central bank surprises markets with a less aggressive hike again," the analyst cautions.

With the current USD/TRY exchange rate, as of 24/08/2023 08:40 BST, hovering at 27.2186, the economic landscape in Turkey is clearly at an inflection point.

As the CBRT's decisions unfold, stakeholders, from investors to policymakers, will be keenly observing the nation's monetary trajectory and the subsequent impact on the Lira.

Turkish Lira Tipped To Test 2023 Lows Vs US Dollar As CBRT Hike To 19% Say UniCredit

August 24 (SeeNews) - Bulgaria's UniCredit Bulbank and the European Investment Bank (EIB) signed a deal for financing in the amount of 200 million euro ($216.1 million) in support of local medium and large enterprises with a potential for growth and job creation, the Bulgarian lender said on Thursday.

As part of the agreement, the EIB will provide a 100 million euro guarantee for a portfolio consisting of investment and revolving loans, each capped at 20 million euro, provided by UniCredit Bulbank under preferential and flexible conditions, the Bulgarian lender said in a statement.

The initiative seeks to foster sustainable investments, allowing local companies to expand their operations and implement new projects.

The deadline for new loans under the programme is December 2024.

"We are building on the long-term partnership of UniCredit Bulbank and the European Investment Bank with another significant agreement that will support our strategic goal - accelerating the development of the Bulgarian economy and unlocking the growth potential of medium and large enterprises," UniCredit Bulbank chief corporate banking director and board member, Borislav Bangeev, said.

In October, the EIB said it would back over 630 million euro of loans to be provided to Bulgarian small and medium enterprises (SMEs) in 2023 by UniCredit Bulbank.

UniCredit Bulbank, EIB in 200 mln euro deal to back Bulgarian companies

The project will finance low-emission electric vehicles (EV) for operational leasing. The EV market in Romania is at an early stage of development with high upfront costs. By financing leasing companies, the EIB plays a significant role in increasing the EV deployment in the EU market, hence in supporting the industry to produce at a larger scale to reduce EV costs.

The aim is to enhance access to finance to Small and Medium Enterprises (SMEs), as well as to reduce CO2 emissions. This project contributes to deploy alternative fuels, thereby reducing not only the negative environmental externalities of road transport, but also the fuel consumption costs for transport operators, mostly SMEs. The project, which has a 100% share of Climate Action, is eligible under Article 309 point (a) projects for developing less-developed regions and point (c) common interest. It also contributes to the EIB's SMEs Lending priority, Transport Lending Policy and Climate Bank Roadmap, as well as sustainable and decarbonised road transport, thereby also supporting EU policy objectives.

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

UNICREDIT FLEET MANAGEMENT ROMANIA CA

Unicredit  :  Factoring in the upgraded guidance and the unexpected windfall tax

MILAN, Aug 1 (Reuters) - UniCredit on Tuesday proposed amending its by-laws to give its board audit powers, which would no longer be exercised by a separate body, in a push to make controls more effective, it said.

The changes, which will have to be approved by a shareholder vote, bring UniCredit's governance in line with that of rival domestic heavyweight Intesa Sanpaolo, as well as Spanish and French banks.

At present the board of directors exercises management and strategic supervision functions, to which it would add the audit one.

The new system ensures a greater effectiveness of controls by bringing the "the control body within the board, which would fully appreciate the inputs of the members of the control body through their direct participation in decision-making," Unicredit said.

(Reporting by Valentina Za Editing by Keith Weir)

UniCredit proposes giving audit powers to board

Unicredit Ceo  Says Bank's Results Will Be 'even Better' In The...

Unicredit Ceo :   We Should Be Capable Of Achieving Rote Level Of...

MILAN, Aug 2 (Reuters) - Italy's UniCredit will achieve 'even better' results in the future after posting its half-year results last week, CEO Andrea Orcel said in an interview published on Wednesday.

"We will do even better. We know what we have to do, it's difficult... time will tell," he told Il Corriere della Sera newspaper.

Orcel also said pass through effects from ECB interest rate decisions are expected to return in line with past levels in 2024, and said that, "normalising everything," the bank is aiming for a ROTE (return on tangible equity) level of 15%. (Reporting by Federico Maccioni, editing by Alvise Armellini)

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