UniCredit remains the protagonist of Piazza Affari, after the publication of the financial statements for the fourth quarter of 2021 and for the entire year.
The quarterly report was carefully examined by several analysts, who churned out their opinions. The stock is showing a positive trend today, also thanks to the sharp narrowing of the BTP-Bund spread, caused by the outcome of the presidential elections. The differential fell this morning to 126, after having climbed up to 140 basis points in recent days, discounting investors’ fears about the future of the Draghi government. But the race to Colle confirmed the status quo. And this status quo, according to Equita SIM analysts, benefits precisely, among other titles, that of Piazza Gae Aulenti.
“We expect that the result of the elections may have positive implications especially for financial stocks, on which we maintain a significant overweight in our recommended portfolio ”, reads today’s note from Equita SIM, which dedicates a separate comment to UniCredit.
UniCredit, Equita: target price 16 euros, confidence in the business plan
Andrea Lisi of Equita SIM refers to the statements that have been made by ceo Andrea Orcel, in the conference call that was called to comment on the financial statements.
“During the call, messages consistent with what was indicated in the December business plan emerged”, known as UniCredit Unlocked, underlined the analyst.
Lisi summarized the “main ideas”:
- UniCredit expects to obtain ECB buyback clearance before the April shareholders’ meeting and start it following the approval of the latter.
- The default rate in 2021 stood at 1.2%, essentially in line with the levels of 2019. For 2022, UniCredit expects a slight increase in the default rate, the impacts of which could in any case be offset by the release of provisions made in 2020-21.
- Although inflation may be higher than assumed in the plan, UniCredit does not expect this to compromise the targets for reducing operating costs in light of the levers available to the company.
- Reiterated the focus on the development of business capital light, balancing internal skills with partnerships with third parties. The review of the partnership with Allianz, which includes joint investments in tecnologia/marketing/training it is the model of how UCG intends to review the agreements also with the other partners, in order to maximize the benefits. In bancassurance, the goal of reducing the number of counterparties is confirmed.
- Regarding the agreement with Allianz, the clause providing for greater margins of strategic flexibility starting from 2024 was inserted to guarantee UniCredit the possibility of evaluating the internalisation of the insurance business (especially in the case of lower capital requirements). To date, this eventuality is not an option.
- UCG confirmed a disciplined approach to M&A. UCG has abandoned the Otkrite data room due to excessive geopolitical risk.
- UCG confirmed to consider the sale of the leasing business in Italy and Germany.
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UniCredit: underlying profit tripled to 3.9 billion in 2021. Orcel rewards shareholders with 3.75 billion, a record
Guidance 2022: guidance of a confirmed net profit (net of cashes and AT1) in excess of € 3.3 billion, with an essentially flat NII interest margin on an annual basis, slightly rising fees, stable operating costs and cost of risk in the 30-35 basis points area.
In 2022 the distribution of capital will be at least 3.75 billion.
RIDE SIM concludes the note by writing to confirm “substantially our estimates 2022-24 and the TP a 16 EURO (2022 P/TE = 0.55x, P/E = 8.6x). We confirm the BUY with the stock that treats at a 2022 P / TE = 0.47x and a tot.yield c.12%.
UniCredit, Credit Suisse: Outstanding Capital Availability, Higher Dividends Not Excluded
Also commenting on UniCredit’s financial results Credit Suisse analysts, who wrote in a note to remain confident looking at the period to which the new Unlocked plan refers, the one between 2022 and 2024:
“Following the fourth quarter of 2021, after (which UniCredit) solidly beat the initial guidance, we reiterate our positive opinion on UniCredit (rating outperform), and on the ability of management to achieve the goal of growth based on transformation, focused on improving profitability, -through an efficient allocation of capital- and on the distribution of excess capital ”.
However, Credit Suisse announces that it has made an adjustment to its pre-tax earnings estimates for 2022/23 by approximately -5%, taking into account the pressure on margins in Italy and of normalization of investment commissions and turnover linked to trading activities, partially offset by a lower provision (of reserves) “.
“We reiterate our price target of € 15.1 and the Outperform rating – write from Credit Suisse – We repeat our preference for UniCredit’s different outlook, which is based on 1) a growth potential in the upper part (of the estimates), especially for the activities of theEastern and Central Europe of the bank, where both rate hikes and volumes are likely to support the interest margin upward without representing an incremental risk; 2) the highest resilient bearings for provisions they offer flexibility (to UniCredit), in the context of uncertainty caused by Omicron; 3) the exceptional availability of capital, which we believe offers significant potential for value creation to the top, in terms of further opportunities to increase the return of excess capital (hence dividends and buybacks) and / or as a resource for inorganic profitable growth ”.
Credit Suisse is therefore focusing onlarge amount of capital, which allows UniCredit to reward shareholders with rich dividends and buybacks, and recalls that the institution closed 2021 with with 138 basis points higher CET1 bearing compared to the average target of the management.
In this situation, “although we believe it is likely that top management will make several contacts to explore potential M&A (merger and acquisitions) operations in different geographic areas, the strong discount of the security compared to the tangible book value it could offer an incentive to increase capital distributions in an even more sustained way, through additional buyback operations ”.
In this regard, it is worth repeating the words with which Andrea Orcel, CEO of UniCredit, commented again the M&A option, after more than a year or so the institute had been seen as a potential lifesaver for MPS, before the negotiations with the major treasury shareholder of Monte dei Paschi di Siena ended with the shipwreck.
Orcel confirmed the latest rumors relating to the decision of stop submitting to the dossier of the Russian bank Otkritie, at a time when, due to the Ukraine factor, the geopolitical tensions between the West and Vladimir Putin’s Russia have been affected by a strong escalation.
The Credit Suisse analysts conclude the note by writing that, “in order to reach our target price of 15.1 euros, we evaluate UniCredit on the basis of the methodology of the sum between the parts, assuming a Sustainable RoTE of 8.2%, a Cost of Equity (CoE) of 11.5% and growth of 0.2%. The risks to our rating and our target price are linked to a potential delay in the economic recovery in the CEE countries where the bank operates, and therefore to an impact on profits ”.
Another downside risk identified is that UCG will not be able to distribute the promised excess capital to shareholders. But for now, this is not the baseline scenario analysts estimate, as the forecast is for even richer dividends.