UniCredit boosts outlook despite Banco BPM pullout
Italy's banking giant UniCredit posted a sharp rise in quarterly profit on Wednesday despite lower revenues, a day after it withdrew its offer for smaller rival Banco BPM due to government restrictions.
Late Tuesday, UniCredit said it was dropping its bid for Italy's third-largest bank Banco BPM, blaming restrictions on the deal imposed by the Italian government while calling it a 'missed opportunity' for shareholders.
Resolution of the impasse did not have 'a clear deadline on it,' CEO Andrea Orcel told analysts during a conference call following results.
'That for us had become a drag. That is the main reason we withdrew,' he said.
The country's second-largest bank posted second quarter net profit of 3.3 billion euros ($3.9 billion) versus 2.7 billion euros a year earlier, a nearly 25% rise.
Excluding one-off items, UniCredit said its net profit stood at 2.9 billion euros, up 8%, above analysts' average estimates of 2.5 billion euros.
Revenues fell, however, by 3.3% to 6.1 billion euros from 6.3 billion euros in the quarter, hit by hedging costs associated with its 9.9% stake in Commerzbank, where UniCredit is now the largest shareholder.
By midmorning, UniCredit shares rose as high as 60.77 euros, up 4.6% on the Milan stock exchange, while those of Banco BPM fell as much as 4.6% to 9.82 euros.
Looking ahead, UniCredit said it was boosting its net income outlook for 2025 to 10.5 billion euros, above its earlier expectation of 9.3 billion
euros.
It also expects 2025 net revenue above 23.5 billion euros.The results demonstrated how 'a transitional year' turned into the bank's 'best year ever,' UniCredit said in a statement.
UniCredit said one-off items impacted its second quarter, including the equity consolidation of its Commerzbank stake and the acquisition of life insurance joint ventures.
For 2026 and beyond, revenue and profit would be boosted through 'the internalisation of life insurance and the equity consolidation of Alpha Bank and Commerzbank,' it said.
UniCredit also said it would soon begin a 3.6-billion-euro share buyback program.
The surprise announcement of UniCredit's withdrawal brought to an end a protracted tug of war since November, pitting UniCredit against Banco BPM and the Italian government, which opposed the potential deal originally valued at 10.1 billion euros.
While Banco BPM considered the move hostile and the offer insufficient, Italy's government under Prime Minister Giorgia Meloni similarly opposed it, as it would have thwarted its plans to create a third large banking group in Italy, comprising Banco BPM and Monte dei Paschi di Siena (MPS).
The point of contention for UniCredit was the government's so-called 'golden power' provision, which it exercised in April and which cited national security concerns due to UniCredit's operations in Russia.
The provision allows the government to set certain restrictive conditions on takeovers in strategic sectors, such as banking.
Those included an obligation for UniCredit to maintain the level of loans granted in Italy for a certain period of time, and to cease all activity in Russia.
UniCredit said Wednesday it was further reducing its exposure in Russia and was already well ahead of its targets and those of the European Central Bank (ECB).
Earlier in July, the European Commission warned Italy that the provision was in potential violation of EU law.
On Tuesday, Italy's financial market regulator, Consob, suspended the bid for 30 days, citing a 'situation of uncertainty' around the offer, potentially giving the parties more time to resolve the problems.
But even with an extended deadline, the uncertainty remained, Orcel said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Jazeera
4 days ago
- Al Jazeera
Fact check: Did US go from ice cream trade surplus to deficit under Biden?
President Donald Trump's administration dished out a cold burn to Trump's ice-cream-loving predecessor, Joe Biden, saying he led the US ice cream industry down an economic rocky road. 'America had a trade surplus in ice cream in 2020 under President Trump's leadership, but that surplus turned into a trade deficit of $40.6 million under President Biden's watch,' the Office of the US Trade Representative wrote July 20 on X. The post included a chart that shows the US ice cream trade deficit with Japan, South Africa, the European Union, Brazil, Canada and Turkiye. The US ice cream trade balance did change dramatically in 2021, the year Biden took office. The trade balance officially flipped negative – which means imports outnumber exports – in 2022 and has remained so since then. But industry experts caution that US ice cream imports account for a minuscule fraction of all the US ice cream consumed in the US, and exports account for a tiny fraction of all US ice cream produced. The trade change was driven mostly by a jump in imports. Exports have remained largely unchanged since 2020. And the cherry on top? Disagreement over which products to classify as 'ice cream' also affects data, experts say. For example, the data referenced by the office of the US Trade Representative also includes 'edible ice', which some experts (and dairy defenders) say doesn't qualify as ice cream. Removing edible ice shows that 'the US is a net exporter by a significant margin of ($193 million) or +85% larger by value,' International Dairy Foods Association Executive Vice President Matt Herrick told PolitiFact via email. Ice cream imports increase causes US trade deficit From 1995 to 2020, the US had an ice cream trade surplus, ranging from about $20m to about $160m, according to the Observatory of Economic Complexity, an online economic data platform. Longtime customers include Mexico, followed by Saudi Arabia and Canada. In 2021, that surplus nearly vanished, and in 2022 and 2023, the US notched up an ice cream trade deficit of $92m and $33m, respectively. At first glance, importing frozen foods doesn't seem practical. 'Shipping refrigerated and frozen products overseas is expensive,' dairy economist Betty Berningat of HighGround Dairy said. 'Mexico is the top destination for US dairy exports.' But many US and European companies have tapped into global markets. 'Consumers may also want a specific treat that is styled after or known to be from another country,' Herrick said. Italy, the birthplace of gelato, is now the United States' largest single source of imported ice cream. Italian ice cream imports more than quintupled from about $12m to almost $65m between 2020 and 2021 alone, before decreasing somewhat in 2023, the last year for which data is available. Some of this stems from increased consumer demand for specialty pints. A report by Mordor Intelligence, a global market research firm, said 'product innovation and premiumisation' have become key in the US ice cream industry. 'This trend is particularly evident in the growth of premium pint offerings and individually wrapped novelties that cater to both indulgence and portion control preferences,' the report said. The US produces far more ice cream than it imports or exports To get to the pint: The vast majority of ice cream consumed in the United States is made there, not overseas. The Trump administration is cherry-picking stats from a fraction of a sliver of the US ice cream industry. According to US Agriculture Department data, US ice cream makers churned out 1.31 billion gallons of ice cream in 2024. This includes regular ice cream, low-fat and nonfat ice cream, sherbet and frozen yoghurt. By comparison, the US imported 2.35 million gallons of traditional ice cream in 2024 – that's 0.18 percent of the amount produced domestically, Herrick said. The US exported 16.4 million gallons of that domestic production, which is also a tiny fraction of 1.31 billion gallons of ice cream – a little more than 1 percent. Factoring in ice cream mixes, excluding 'edible ice' products Another caveat about the international trade data: It does not include 'mixes', which skews the totals, said Herrick of the International Dairy Foods Association. Mixes are used to make ice cream shakes and soft-serve products, and they account for a significant portion of US ice cream exports. 'Inclusion of such data points would change the picture quite significantly,' said Herrick. 'While it is true that traditional ice cream and edible ice exports have seen decreased exports, the same cannot be said for exports of mixes.' US milk-based drink exports increased 621 percent over the past five years, he said. In 2024, the US exported nearly $35m in mixes to the European Union. Americans and dairy-based ice cream: A centuries-old love affair melting away? The White House has churned out plenty of ice cream devotees. George Washington stocked the capital with ice cream-making equipment. Thomas Jefferson is credited as being the first American to record an ice cream recipe. Ronald Reagan declared July National Ice Cream Month in 1984. Barack Obama even slung scoops back in the day. Biden, who was often sighted with a cone in hand, proclaimed while visiting Jeni's Splendid Ice Cream headquarters in 2016: 'My name is Joe Biden, and I love ice cream.' But consumption of regular dairy ice cream – a category that does not include frozen yoghurt, sherbet or nonfat and low-fat ice creams – has been trending down for years. In 1975, Americans ate an average of 18.2 pounds each of ice cream per year. That figure fell to 11.7 pounds by 2023. Our ruling The office of the US Trade Representative purported a summertime scoop: 'America had a trade surplus in ice cream in 2020 under President Trump's leadership, but that surplus turned into a trade deficit of $40.6 million under President Biden's watch.' It's accurate that the US ice cream trade balance had a surplus for a quarter of a century before turning negative while Biden was president. But the US Trade Representative's statement makes the US ice cream deficit appear out of cone-trol. There are three scoops of context on this trade sundae: The change was driven mostly by a jump in imports. Exports have remained largely unchanged since 2020. US ice cream imports and exports are a negligible amount compared to domestic production. There's also disagreement over which products should or shouldn't be included in the data set, which can skew trend interpretations. Excluding edible ice products and factoring in ice cream mixes leaves the US with a surplus. The statement is accurate but needs a sprinkling of clarification and additional details, so we rate it Mostly True. Louis Jacobson contributed to this report.
Qatar Tribune
5 days ago
- Qatar Tribune
UniCredit boosts outlook despite Banco BPM pullout
Agencies Italy's banking giant UniCredit posted a sharp rise in quarterly profit on Wednesday despite lower revenues, a day after it withdrew its offer for smaller rival Banco BPM due to government restrictions. Late Tuesday, UniCredit said it was dropping its bid for Italy's third-largest bank Banco BPM, blaming restrictions on the deal imposed by the Italian government while calling it a 'missed opportunity' for shareholders. Resolution of the impasse did not have 'a clear deadline on it,' CEO Andrea Orcel told analysts during a conference call following results. 'That for us had become a drag. That is the main reason we withdrew,' he said. The country's second-largest bank posted second quarter net profit of 3.3 billion euros ($3.9 billion) versus 2.7 billion euros a year earlier, a nearly 25% rise. Excluding one-off items, UniCredit said its net profit stood at 2.9 billion euros, up 8%, above analysts' average estimates of 2.5 billion euros. Revenues fell, however, by 3.3% to 6.1 billion euros from 6.3 billion euros in the quarter, hit by hedging costs associated with its 9.9% stake in Commerzbank, where UniCredit is now the largest shareholder. By midmorning, UniCredit shares rose as high as 60.77 euros, up 4.6% on the Milan stock exchange, while those of Banco BPM fell as much as 4.6% to 9.82 euros. Looking ahead, UniCredit said it was boosting its net income outlook for 2025 to 10.5 billion euros, above its earlier expectation of 9.3 billion euros. It also expects 2025 net revenue above 23.5 billion results demonstrated how 'a transitional year' turned into the bank's 'best year ever,' UniCredit said in a statement. UniCredit said one-off items impacted its second quarter, including the equity consolidation of its Commerzbank stake and the acquisition of life insurance joint ventures. For 2026 and beyond, revenue and profit would be boosted through 'the internalisation of life insurance and the equity consolidation of Alpha Bank and Commerzbank,' it said. UniCredit also said it would soon begin a 3.6-billion-euro share buyback program. The surprise announcement of UniCredit's withdrawal brought to an end a protracted tug of war since November, pitting UniCredit against Banco BPM and the Italian government, which opposed the potential deal originally valued at 10.1 billion euros. While Banco BPM considered the move hostile and the offer insufficient, Italy's government under Prime Minister Giorgia Meloni similarly opposed it, as it would have thwarted its plans to create a third large banking group in Italy, comprising Banco BPM and Monte dei Paschi di Siena (MPS). The point of contention for UniCredit was the government's so-called 'golden power' provision, which it exercised in April and which cited national security concerns due to UniCredit's operations in Russia. The provision allows the government to set certain restrictive conditions on takeovers in strategic sectors, such as banking. Those included an obligation for UniCredit to maintain the level of loans granted in Italy for a certain period of time, and to cease all activity in Russia. UniCredit said Wednesday it was further reducing its exposure in Russia and was already well ahead of its targets and those of the European Central Bank (ECB). Earlier in July, the European Commission warned Italy that the provision was in potential violation of EU law. On Tuesday, Italy's financial market regulator, Consob, suspended the bid for 30 days, citing a 'situation of uncertainty' around the offer, potentially giving the parties more time to resolve the problems. But even with an extended deadline, the uncertainty remained, Orcel said.
Qatar Tribune
21-07-2025
- Qatar Tribune
ECB expected to hold rates as tariff uncertainty lingers
Agencies The European Central Bank is set to hold interest rates for the first time in almost a year when policymakers meet this week, despite concerns over the potential impact of higher US tariffs on the eurozone economy. The 26 members of the ECB's governing council will meet just over a week before an August 1 deadline set by US President Donald Trump for the imposition of his government's punitive tariffs. Trump has threatened to triple a basic tariff on imports from the EU to 30 percent if Brussels does not cut a deal by the end of the month, casting uncertainty over the future of transatlantic trade. But the ECB was expected to hold tight on rates instead of preempting the outcome of negotiations, pausing a series of cuts that goes back to September. The central bank has reduced its benchmark rate a total of eight times since June last year and at each of its last seven meetings, bringing it down to two percent. The rapid reduction in rates has come as eurozone inflation has fallen back towards the ECB's two-percent target from the double-digit highs seen in 2022. In June, eurozone inflation sat exactly on the ECB's target and was forecast by officials at the central bank to even out at two percent for the year. The ECB would 'almost certainly leave interest rates unchanged' at the conclusion of its monetary policy meeting on Thursday, analysts from Italian bank UniCredit said in a note. 'The central bank will now want to have more clarity on the trade outlook before it considers adjusting its policy further,' they said. Despite the murky outlook, the ECB was in a 'good place' to deal with what comes next, executive board member Isabel Schnabel told financial news service Econostream Media this month. And with the euro area economy showing some signs of life despite Trump's threats on tariffs, 'the bar for another rate cut is very high', she said. Euro area factory output has grown four months in a row and the bloc's manufacturing PMI—a survey-based measure of manufacturer's overall health—rose in June to its highest level since August 2022. The improving picture painted by recent indicators could, however, be shattered were Trump to follow through with additional tariffs on top of steep existing levies on auto manufacturers, steel and aluminum. The saber-rattling from the Oval Office over trade—and Trump's repeated attacks on the US Federal Reserve's independence—have otherwise had the impact of weakening the dollar against the euro. Were the euro to rise much further it would make matters 'much more complicated', ECB Vice President Luis de Guindos told Bloomberg TV this month. A stronger single currency brought with it the risk of undershooting the ECB's inflation target by making imports cheaper and cooling the economy, while making European exports more expensive. Already, the ECB's forecasts published last month predict inflation to fall to 1.6 percent in 2026, before recovering to two percent the following year. A strong euro meant rate cuts later in the year were a matter of 'when and by how much and not if', ING bank analyst Carsten Brzeski said. The question would get 'more attention' at forthcoming ECB gatherings, Brzeski said, but the uncertainty over US tariffs argued in favor a 'wait-and-see approach'. Trump had upped the threatened level of tariffs on EU exports to the United States since the ECB's last meeting but where they would land after August 1 was uncertain. With the EU locked in talks with Washington to avoid higher tariffs, the necessary 'clarity is unlikely to emerge by next Thursday', UniCredit analysts said. A pause was likely before another cut later in the year, perhaps already in September, the first meeting after the summer, they said.
