Latest news with #CET1
Yahoo
2 days ago
- Business
- Yahoo
UBS bank challenges proposed capital requirement increases
UBS banking group has mostly accepted regulatory proposals issued by the Swiss government but on Friday argued against an increase in capital requirements. The measures from the Federal Council "would result in capital requirements that are neither proportionate nor internationally aligned," the bank said. The new proposals would require UBS to fully deduct investments in foreign subsidiaries, deferred tax assets on temporary differences, and capitalized software from its CET1 capital, alongside increased prudential valuation adjustments. UBS noted that the changes would force the company to hold an estimated additional $24 billion in CET1 capital, primarily due to a $23 billion deduction of its foreign subsidiaries' investments. At the group level, the CET1 capital ratio would rise to 19%, but regulatory measures misaligned with global standards could reduce it to around 17%, underrepresenting UBS's financial strength. The capital requirement increase would come on top of $18 billion already needed following UBS's acquisition of Credit Suisse-bringing the total additional CET1 capital required to $42 billion. Despite these proposed regulations, UBS Group AG maintains its target of a 15% underlying return on CET1 capital and a cost/income ratio below 70% by the end of 2026. UBS reaffirms its 2025 capital return plans, including a 10% dividend increase and share repurchases of up to $3 billion, contingent on maintaining its CET1 capital ratio target of 14%. Future capital return goals for 2026 will be disclosed with its fourth-quarter and full-year financial results for 2025. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
28-05-2025
- Business
- Wall Street Journal
UniCredit Plans to Double Stake in Greek Bank Alpha Services to Around 20%
UniCredit UCG 1.96%increase; green up pointing triangle said it would double its stake in Greece's Alpha Services to around 20% after entering into agreements with investment banks for financial instruments representing nearly 10% of the company. The Italian bank said Wednesday that it has entered into financial contracts for an around 9.7% stake in Alpha at a share price discount to previous closing prices. UniCredit did not disclose the price paid for the instruments. Alphavalue shares closed at 2.79 euros yesterday and currently trade up 3.5% at 2.89 euros. UniCredit's stake will increase to around 20%, from a current holding of 9.6% once regulatory approval is granted, it said. The transaction will generate an additional net profit of around 180 million euros ($203.9 million) per year which it intends to return to shareholders in line with its distribution policy, it said. It will have an around 40 basis point impact on UniCredit CET1 ratio–a measure of a bank's resilience. The deal is expected to complete by the end of 2025, UniCredit said. Write to Adam Whittaker at
Yahoo
13-05-2025
- Business
- Yahoo
UniCredit SpA (UNCFF) Q1 2025 Earnings Call Highlights: Record-Breaking Quarter with Strong ...
Net Revenue Growth: Increased by 3.2% year-on-year and 14.6% quarter-on-quarter. Net Profit: Increased by 8.3% to EUR 2.8 billion. Return on Tangible Equity (RoTE): Achieved 22%, with an adjusted RoTE of 26% at 13% CET1. Cost-to-Income Ratio: Reduced to 35.4%. Net Interest Income (NII) Return on Allocated Capital (RoAC): Increased to 20%. Fee Income Growth: Grew 8.2% year-on-year and 16.5% quarter-on-quarter. Cost of Risk: Remained low at 8 basis points. CET1 Ratio: Increased to 16.1%, or 16.6% excluding the accrued share buyback. EPS Growth: Increased by 18%. Dividend Per Share Growth: Increased by 46%. Organic Capital Generation: Generated EUR 3.1 billion organically and EUR 5.3 billion overall. Fee to Revenue Ratio: Climbed to 36%. Loan-to-Deposit Ratio: Stands at 87%. Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR): Above 140% and 125%, respectively. Warning! GuruFocus has detected 5 Warning Sign with UNCFF. Release Date: May 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. UniCredit SpA (UNCFF) reported its best quarter in history, with record results across all key performance indicators (KPIs). Net profit increased by 8.3% to EUR 2.8 billion, achieving a 22% return on tangible equity. The company upgraded its 2025 guidance, expecting to exceed 2024 net income and return on tangible equity, with distributions above last year. Fee income reached a new record, growing 8.2% year-on-year, with strong performance across various categories and regions. UniCredit SpA (UNCFF) maintained a strong capital position, with a CET1 ratio of 16.1%, and a buffer of EUR 8.5 billion to EUR 10 billion. Net interest income (NII) showed a decline, although it was offset by strong fee generation. The macroeconomic environment remains challenging, with expectations of softer net operating profit due to normalizing rates and cost of risk. The company faces potential volatility in trading revenues, which may not repeat the significant overperformance seen in Q1. There is uncertainty surrounding M&A opportunities, with political hostilities and strategic considerations impacting potential deals. The company has a significant amount of excess capital, which it aims to address by 2027, but this may be impacted by market conditions and strategic decisions. Q: How much of the potential upward revision of guidance on net revenues is from provisions and trading, and how much from fees and costs? Also, can you clarify your stance on M&A, particularly regarding Commerzbank and strategic objectives? A: Andrea Orcel, CEO: The significant beat on core revenues is due to better-than-expected fees and expected NII. Trading was benign, driven by client risk management and treasury performance. Costs and provisions were better than expected. We may increase guidance further if trends continue. On M&A, we evaluate opportunities in every market but will only pursue those that enhance shareholder value. We prioritize new market entry, strengthening factories, and share buybacks, depending on returns. Q: What is the expected trend in headcount and any related cost implications from the Google partnership? Also, can you provide more color on the CET1 capital strength this quarter? A: Andrea Orcel, CEO: We focus on cost efficiencies rather than FTE reduction, reinternalizing activities and investing in younger talent. The Google partnership will transform the bank, similar to other strategic partnerships. Stefano Porro, CFO: The CET1 capital strength was bolstered by ruble appreciation and strategic portfolio performance, with a buffer maintained for volatility. Q: Can you provide details on the impact of the mark-to-market of strategic stakes like Commerzbank and Generali on CET1 and trading? Also, what's the timeline for the Banco BPM transaction? A: Andrea Orcel, CEO: The strategic portfolio had a positive 25 basis points impact on CET1, with a EUR40 million negative impact on trading due to hedges. Regarding Banco BPM, we are evaluating the situation, considering factors like asset quality and capital projections, and awaiting clarification on the golden power before making a decision. Q: What drove the decline in net interest income in Austria, and what is the expected impact of the replication portfolio? Also, can you elaborate on the EUR400 million net profit benefit expected by 2027? A: Stefano Porro, CFO: The decline in Austria's NII was due to customer rate trends and deposit repricing. The replication portfolio is expected to contribute EUR500 million over three years, mainly in 2026 and 2027. The EUR400 million net profit benefit by 2027 includes contributions from insurance, Alpha Romania, and Aion-Vodeno, with synergies expected in the coming years. Q: How are you planning to address excess capital, and what are your expectations for NII given the lower pass-through this quarter? A: Andrea Orcel, CEO: We remain committed to returning excess capital above 13% CET1 by 2027, either through M&A or share buybacks, depending on shareholder value. Stefano Porro, CFO: We expect a moderate decline in NII, with potential upside if pass-through reductions continue. Our assumptions include a deposit facility rate below 2% by year-end. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
09-05-2025
- Business
- Yahoo
National Bank of Greece SA (NBGPRA.PFD) Q1 2025 Earnings Call Highlights: Strong Profitability ...
Release Date: May 08, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. National Bank of Greece SA (NYSE: reported strong profitability in Q1 2025, with profits exceeding EUR 380 million and a return on tangible equity over 19%. The bank's earnings per share, normalized for trading results, stood at EUR 1.44, surpassing the full-year guidance of EUR 1.3. Credit expansion was healthy, with a net increase of EUR 0.3 billion in Q1, and a strong pipeline of approved corporate credits over EUR 2 billion. The bank's capital position strengthened, with a CET1 ratio increasing by 40 basis points to 18.7%, and a total capital ratio of 21.5%. The bank's cost-to-income ratio remains low at 30%, evidencing strong top-line resilience and efficient cost management. Net interest income was down 4% quarter-on-quarter, reflecting a significant drop in average arrival rates by approximately 100 basis points. Operating expenses increased by 5% year-on-year, driven by higher wages, variable remuneration, and investments in human capital. Despite strong originations, the performing loan stock remained flat in Q1 due to factors like FX impact and amortization of securitization bonds. The bank faces potential risks in the shipping sector, with concerns about lower trade volumes impacting shipping loans. There is uncertainty regarding the impact of lower interest rates on net interest income, with sensitivity to EUR rates remaining a concern. Warning! GuruFocus has detected 7 Warning Sign with Q: Could you provide guidance on how your loan growth pipeline will unfold in the coming periods, and any changes in your full-year guidance? Also, what should we anticipate in terms of spreads and loan pricing? A: We have a strong pipeline, and most of it should be dispersed in 2025, supporting our 2.5 billion net expansion guidance. Loan growth is primarily driven by corporate and large corporates, with some optimism in the mortgage market due to a new government program. Regarding spreads, most of the loan spread contraction has occurred, especially in corporates, with less pressure as rates decline. No major changes are expected. Q: Your performing loan stock remained flat in Q1 despite strong originations. Were there any redemptions, and how do you expect them to develop? Also, what is your confidence level on NIM staying above 2.8% given the lower rate trajectory? A: The flat loan stock is due to FX impacts from our shipping portfolio in USD and amortization of securitization bonds. We are confident about maintaining NIM above 2.8% by year-end, with sensitivity to EUR rates remaining at 35 million for every 25 basis points change. The repricing of time deposits will provide additional benefits over the next nine months. Q: Can you discuss your lending opportunities outside of Greece and the recent capital increase in your Cypriot subsidiary? A: We are exploring international syndicated lending in Europe, focusing on sectors like energy, infrastructure, and hospitality. In the Middle East, particularly Riyadh, we are expanding our presence. The capital increase in our Cypriot subsidiary supports lending abroad, ensuring compliance with regulatory capital requirements. Q: Could you quantify the deposit hedge benefit this quarter, and discuss your exposure to shipping loans? A: The deposit hedge benefit was marginally positive this quarter, with more significant benefits expected in the coming quarters. Our shipping loan exposure is primarily in tankers and bulk, with limited container vessel financing. While there are uncertainties, we have strong collateral values and loan-to-value ratios, which should mitigate risks. Q: With the core banking system upgrade nearing completion, how will this translate into a competitive advantage? A: The new core banking system offers flexibility, allowing us to launch new products quickly and reduce maintenance and licensing costs. It also enhances operational and cyber risk management. Early adopters of tech in the banking sector are likely to be winners in the consolidation game. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
06-05-2025
- Business
- Reuters
US banks modest use of risk transfers is credit positive, Moody's says
May 6 (Reuters) - A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. banks. In deals known as credit risk transfers, banks effectively buy insurance from hedge funds and other investors against the risk of losses from loans. They grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization levels. Still only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said. "More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative," it said. The total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit positive. Of the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it said. Banks completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it said. CRT investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey found. Most new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's.
