UniCredit (UCG) Q2 2024 earnings summary

Executive summary

• Achieved record net profit of €5.24bn in H1 2024, up 19.7% year-over-year, with 14 consecutive quarters of profitable growth and sector-leading KPIs.

• RoTE reached 20% in H1 2024, with EPS up 36% and tangible book value per share up 20% year-over-year.

• Strategy focuses 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.

• Transformation into a resilient, blue-chip bank with a client-centric approach and focus on quality over volume.

Financial highlights

• Net revenue rose 6.7% year-over-year to €12.7bn in H1 2024, driven by fee growth (+6.6%), resilient NII (+5.1%), and trading income (+11.1%).

• Operating costs declined 1.2% year-over-year to €4.6bn, improving the cost/income ratio to 36.3%.

• Gross operating profit increased 11.8% to €8.1bn; net profit grew 19.7% to €5.24bn.

• CET1 ratio at 16.32%, with €6.7bn organic capital generation in H1 2024.

• Cost of risk at 5bps for H1 and 1bp for Q2, with overlays of €1.7bn providing a buffer.

Outlook and guidance

• FY24 net revenue guidance raised to above €23bn; net profit guidance confirmed above €8.5bn, with cost of risk below 20bps.

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

• Ordinary distribution policy set at at least 90% of net profit, targeting €8.6bn-€10bn in 2024, with potential to repeat or exceed in subsequent years.

• Cost base expected to remain broadly flat while continuing investments in digital, people, and product factories.

• Macroeconomic uncertainty persists, but strong capital and liquidity positions are maintained.