UCG Unicredit Spa

By Pierre Bertrand

UniCredit opted not to pay an Italian windfall tax, after it reported a forecast-beating rise in third-quarter earnings driven by net interest income and raised its guidance.

The bank said Tuesday that it has opted to put 1.1 billion euros ($1.17 billion) to its nondistributable reserve rather than contribute to an Italian windfall tax, which was approved by the country's parliament earlier this month.

Banks in Italy were given the option to pay taxes on their excess profits relative to 2021, or to allocate two and a half times what they would have paid in tax into a reserve that can't be distributed to shareholders.

The Italian bank said it made EUR2.32 billion in net profit for the period, compared with EUR1.71 billion a year prior, on revenue that grew 24% on year to EUR5.97 billion.

Net interest income, a key revenue metric, rose in the quarter by 2.9% compared with the second quarter and by 45% on year to EUR3.6 billion, UniCredit said.

The result compares with expectations of EUR1.92 billion in net profit, EUR3.5 billion in net interest income and EUR5.74 billion in revenue, according to a bank-provided consensus of analysts' average expectations.

UniCredit said that its operational costs in the quarter were flat in 3Q compared with 2Q and had declined 2.3% on year.

It said that its result reflected consistent growth across all regions.

It also added that it saw its average gross commercial performing loans as of Sept. 30 decline 1.3% relative to the second quarter, and by 4.2% compared to a year prior, while average commercial deposits also fell by 1.6% and by 5.6% compared with second quarter and on year respectively.

UniCredit raised its 2023 guidance for net interest income to at least EUR13.7 billion from at least EUR13.2 billion. It said it sees 2023 net revenue at above EUR22.2 billion from above EUR21.5 billion previously.

It added that it guides for net profit of at least EUR7.25 billion and a shareholder distribution of at least EUR6.5 billion for 2024.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

October 24, 2023 04:52 ET (08:52 GMT)

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