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1. Company Snapshot

1.a. Company Description

UniCredit S.p.A. operates as a commercial bank that provides retail, corporate, and private banking services.It offers accounts and deposits, loans, cards, transactions and payments, funds, advisory, treasury, and insurance products, as well as digital and mobile banking services.The company also provides solutions for payments and liquidity, working capital, hedging, international trade, and treasury operations; and funding solutions comprising of structured, project, and commodity trade and export finance, as well as debt and equity funding; and structured investments and investments advisory solutions.


In addition, the company provides corporate finance, capital structure, and rating advisory, as well as patient capital, financial sponsor solutions, and sustainable finance solutions.It servs retail, corporate, and public sector customers, as well as international companies and institutional clients.The company operates in Italy, Other European countries, America, Asia, and internationally.


The company was formerly known as Unicredito Italiano S.p.A and changed its name to UniCredit S.p.A. UniCredit S.p.A. was founded in 1870 and is headquartered in Milan, Italy.

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1.b. Last Insights on UCG

UniCredit's recent performance was driven by a record-breaking quarter with significant growth in net profit, revenue, and capital strength. The company's Q2 earnings beat expectations, with a net profit of €2.9 billion, and raised its 2025 outlook. The decision to drop its takeover bid for Banco BPM, citing government meddling, allowed UniCredit to focus on its core business. A new share buy-back program was also announced, which will reduce the number of outstanding shares, increasing shareholder value. CEO Andrea Orcel described it as the "best first half in the bank's history".

1.c. Company Highlights

2. UniCredit's Q3 Results: A Showcase of Resilient Performance

UniCredit reported a robust set of third-quarter results, completing the best 9 months in its history. The bank achieved its 19th consecutive quarter of quality profitable growth, beating net revenue and core components. Net revenues were up in the quarter and stable over 9 months, despite a challenging macro environment. The actual EPS came out at €1.62, slightly beating estimates at €1.6. The net profit was up 4.7% in the quarter and 12.9% in 9 months, at a 22% average return on tangible equity. The bank's cost-to-income ratio remains among the best in Europe, at 36.8% in the 9 months and 37.1% in the quarter.

Publication Date: Oct -26

📋 Highlights
  • Record Profit Growth:: Net profit rose 4.7% QoQ and 12.9% YoY to €2.4B, with a 22% average RoTE over nine months.
  • Cost Efficiency:: Cost/income ratio stabilized at 36.8% over nine months, among lowest in Europe, supporting best-in-class profitability.
  • Capital Deployment:: €6.5B allocated to stake consolidation in Commerzbank, targeting 20% ROI and €1B incremental net profit by 2027.
  • 2025 Guidance:: Net profit target set at €10.5B, with 80% payout ratio for dividends/share buybacks from 2026, aligning with 2027+ growth.
  • Italy Performance:: Italy contributed 44% of group net profit, with fees/insurance income up 4.7% to 42% of revenues despite NII declines.

Financial Performance

The bank's financial performance was driven by better-than-expected net interest income (NII) and robust fees. Italy continues to be a quality earnings powerhouse, accounting for 44% of group net profit, while Germany remains a resilient anchor, accounting for 22%. The bank's Russian franchise has been significantly reduced, with local loans and deposits accounting for less than 0.5% of the group's total. UniCredit's CEO, Andrea Orcel, stated that the bank's strategy is working, with a 19th consecutive quarter of quality profitable growth.

Valuation and Dividend Yield

UniCredit's current P/TBV ratio stands at 1.4, indicating a relatively attractive valuation. The bank's dividend yield is 3.92%, which is a decent return for investors. With a ROE of 16.33%, UniCredit is generating strong returns on equity. The bank's guidance for 2027 is well above €11 billion in net profit, with an expected contribution of around €1 billion from Commerzbank and Alpha.

Growth Prospects

The bank's management team discussed their future plans, distributions, and investments, highlighting a potential distribution of excess capital. UniCredit invested €6.5 billion in stake consolidation, which will generate a 20% return on investment. The bank is committed to holding or improving both cost/income ratio and return on tangible equity while growing. With a focus on organic growth, UniCredit aims to achieve significant milestones through 2026-28.

Commerzbank and Alpha Bank

UniCredit's stake in Commerzbank is expected to contribute significantly to its net profit. The bank is aligned with Commerzbank on the upside, but has hedges in place, including a put option on the stake. The 29% stake may be consolidated over time, but for now, it's not necessary, and the focus is on minimizing the impact on capital and reducing P&L volatility.

Cost Efficiency and Strategy

UniCredit's cost growth has been a focus, with a commitment to keep costs broadly flat from 2024 to 2027. The bank has absorbed €100 million in costs from new perimeter consolidation and plans to continue investing in growth while maintaining cost control. The bank's efficiency can improve, and its sector has been slow to adapt, but by constantly evaluating and streamlining operations, UniCredit aims to find opportunities to become more efficient.

3. NewsRoom

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Crypto Weekly: American Bitcoin's bumpy week, Binance's new co-CEO

Dec -04

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How Recent Analyst Shifts Are Rewriting the Story for UniCredit

Dec -04

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Taking Stock of UniCredit (BIT:UCG)’s Valuation After a Powerful Multi‑Year Share Price Rally

Dec -03

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10 EU Banks Unite to Launch Euro Stablecoin by 2026

Dec -03

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Econergy secures €40.5M project financing for its 87 MW Oradea solar project in Romania

Dec -03

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BNP Paribas Joins EU Bank Stablecoin Venture Helmed by Ex-Coinbase Germany Exec

Dec -02

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10 European Banks Form Stablecoin Company qivalis

Dec -02

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European banks led by BNP, ING push ahead on euro stablecoin plan

Dec -02

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.41%)

6. Segments

ITALY

Expected Growth: 4.2%

UniCredit S.p.A.s Italian segment benefits from its established market presence, diversified product offerings, and strong brand recognition, driving growth in the Italian banking market.

GERMANY

Expected Growth: 5.5%

UniCredit's Germany segment, driven by economic growth and increasing demand for retail and commercial banking services, will experience a stable growth rate. The segment will benefit from the bank's strong brand recognition and extensive branch network.

CENTRAL EUROPE

Expected Growth: 6.5%

UniCredit's Central Europe operations are expected to grow driven by increasing economic stability in Austria and Central Eastern Europe, as well as the bank's strong presence in the region.

EASTERN EUROPE

Expected Growth: 6.5%

The Eastern European region served by UniCredit S.p.A. will experience growth driven by increasing economic stability, foreign investment, and a growing middle class.

Russia

Expected Growth: 8.5%

Russia's economic growth, driven by increasing consumer confidence, and UniCredit's strong presence, supported by its acquisition of ATF Bank, will fuel the segment's growth.

Group Corporate Center

Expected Growth: 4.4%

UniCredit's corporate functions and governance are expected to grow driven by strategic cost management, digitalization, and process optimization, while maintaining a strong risk management framework.

7. Detailed Products

Corporate Lending

UniCredit provides corporate lending services to large and medium-sized enterprises, offering a range of financing solutions tailored to their specific needs.

Transaction Banking

UniCredit's transaction banking services provide cash management, trade finance, and securities services to corporate clients, enabling efficient management of their financial flows.

Markets and Investment Banking

UniCredit's markets and investment banking division provides a range of services, including equity and debt capital markets, mergers and acquisitions, and leveraged finance.

Retail Banking

UniCredit's retail banking services provide personal banking, credit cards, and loan products to individual customers, as well as wealth management and insurance services.

Private Banking

UniCredit's private banking services offer tailored wealth management solutions, investment advice, and portfolio management to high net worth individuals.

Leasing and Factoring

UniCredit's leasing and factoring services provide financing solutions for businesses, including equipment leasing, vehicle leasing, and invoice financing.

8. UniCredit S.p.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for UniCredit S.p.A. is medium due to the presence of alternative financial institutions and digital payment systems. However, the company's strong brand recognition and extensive network of branches and ATMs mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for UniCredit S.p.A. due to the lack of negotiating power of individual customers. The company's large customer base and diversified product offerings also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for UniCredit S.p.A. due to the presence of a few large suppliers of technology and services. However, the company's scale and diversification of suppliers reduce the bargaining power of individual suppliers.

Threat Of New Entrants

The threat of new entrants is low for UniCredit S.p.A. due to the high barriers to entry in the banking industry, including regulatory requirements and capital requirements. The company's strong brand recognition and extensive network of branches and ATMs also make it difficult for new entrants to gain market share.

Intensity Of Rivalry

The intensity of rivalry is high for UniCredit S.p.A. due to the presence of several large and established competitors in the European banking industry. The company faces intense competition in terms of pricing, product offerings, and customer service.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 68.65%
Debt Cost 3.95%
Equity Weight 31.35%
Equity Cost 11.40%
WACC 6.28%
Leverage 218.99%

11. Quality Control: UniCredit S.p.A. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
KBC

A-Score: 7.4/10

Value: 6.9

Growth: 6.0

Quality: 6.7

Yield: 7.5

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
SEB

A-Score: 7.0/10

Value: 5.6

Growth: 5.4

Quality: 5.6

Yield: 8.1

Momentum: 8.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Danske Bank

A-Score: 6.8/10

Value: 5.5

Growth: 4.4

Quality: 5.6

Yield: 8.1

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
UniCredit

A-Score: 6.7/10

Value: 6.2

Growth: 5.9

Quality: 6.8

Yield: 6.9

Momentum: 9.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Lloyds Banking

A-Score: 6.3/10

Value: 6.6

Growth: 2.8

Quality: 5.6

Yield: 6.9

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Deutsche Bank

A-Score: 5.8/10

Value: 8.3

Growth: 3.4

Quality: 5.9

Yield: 3.1

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

65.05$

Current Price

65.05$

Potential

-0.00%

Expected Cash-Flows