UniCredit (UCG) Q2 2024 earnings summary

Executive summary

• Achieved record net profit of €5.2bn in 1H24, up 20% year-over-year, with 14 consecutive quarters of profitable growth and sector-leading KPIs.

• RoTE reached 19.7% for 1H24 (20% in Q2), and 23.3% when based on 13% CET1 ratio.

• Strategy remains focused on sustainable, quality earnings growth, operational and capital efficiency, and best-in-class distributions.

• Strong performance across all regions and product lines, with continued investment in people, technology, and product factories.

Financial highlights

• Net profit grew 20% year-over-year for 1H24 and 16% for Q2; EPS up 36% in H1, tangible book per share up 20%.

• Net revenues increased 7% to €12.6bn in H1 and 6% to €6.3bn in Q2, driven by resilient NII and strong fee growth.

• Operating costs declined 1.2% year-over-year, with cost/income ratio improving to 36.3%, down 2.9 percentage points year-over-year.

• CET1 ratio at 16.2%, with €6.7bn organic capital generation in 1H24.

• Gross NPE ratio at 2.6%, cost of risk at 1bp in Q2 and 5bps in H1, with overlays of €1.7bn.

Outlook and guidance

• 2024 guidance upgraded: net revenue above €23bn, net profit above €8.5bn, cost of risk below 20bps, and costs below €9.5bn.

• Double-digit EPS and DPS growth expected; RoTE target around 16.5% for 2024 and above 15% for 2025-26.

• Distribution guidance for 2024 confirmed at circa €10bn, with 60% already accrued at 1H24.

• Ordinary distribution policy set at at least 90% of net profit, not exceeding organic capital generation.

• Cost base expected to remain broadly flat while continuing investments in digital and ESG initiatives.