UniCredit (UCG) 8th Annual European Perspectives Seminar: The Big Picture summary

Transformation and sector leadership

• Achieved 14 consecutive quarters of growth, reversing years of revenue decline and establishing sector-leading KPIs, including a cost-income ratio of 36% and significant organic capital generation.

• Net profit increased from €900 million to €2.5 billion per quarter, with return on tangible equity rising from 4.5% to 21% and capital distributions multiplied 14x since 2017-2019.

• Transitioning from transformation to sustainable sector leadership, aiming for superior profitable growth and outsized distributions, combining growth and distribution at unmatched levels.

• Structural advantages include a diversified geographic mix (Italy, Germany, Austria, CEE) and a business model focused on quality growth and fee income, with Italy as a strong anchor.

• Internalization of life insurance in Italy approved, expected to further boost fee income and net earnings.

Financial guidance and capital distribution

• Confident in exceeding €9 billion net income for 2024, with potential to reach €10 billion excluding extraordinary items, and expects to beat €9 billion in 2025 despite rate and Russia headwinds.

• Guidance for capital distribution remains at €8.6 billion for 2024, with distributions exceeding this amount in 2025 and 2026, supported by strong organic capital generation.

• Dividend payout ratio to increase from 40% to 50% starting in 2025, raising cash yield to the top of the sector.

• Commitment to return excess capital above 13% CET1 to investors by 2027 remains unchanged.

Commerzbank investment and strategic options

• Acquired a 21% stake in Commerzbank as a financial investment, with no current plans for a merger or offer; all scenarios remain open, including maintaining the stake, pursuing deeper collaboration, or selling.

• Investment aligns with financial metrics, targeting returns above 15%, and offers potential for value creation through transformation similar to HVB.

• Any future combination would require broad stakeholder support and must meet strict financial and strategic criteria; no board seat will be sought as long as UniCredit remains a competitor.

• Significant revenue synergies are anticipated if deeper collaboration occurs, especially in corporate banking and services, with any initial dilution of profitability expected to be short-lived.

• Ongoing dialogue with Commerzbank stakeholders is emphasized as essential for any future developments.