UniCredit forecasts revenue decline as profit rises in 2025

In Italy, UniCredit reported a strong performance for the fourth quarter, achieving a net profit of 1.969 billion euros, exceeding analyst expectations. Despite this profit beat, the bank has projected a slight slowdown in revenues for 2025, anticipating them to be below the 24.8 billion euros recorded in the previous year. CEO Andrea Orcel highlighted a focus on accelerating growth and widening the competitive gap but acknowledged challenges stemming from declining net interest income and impacts from their business in Russia. UniCredit has also upped its cash dividend payout guidance to 50% of net profit for 2025, showcasing a commitment to returning more value to its shareholders. A key focus for the bank moving forward is its pursuit of mergers and acquisitions, with notable stake builds in Commerzbank and Banco BPM as part of Italy's consolidation efforts in the banking sector. However, this ambition has faced resistance both domestically and from German authorities due to UniCredit's aggressive tactics. In addition to growth ambitions, UniCredit is grappling with market pressures in its operational regions. While the bank anticipates fee income to rise by a mid-single-digit percentage in 2025, the overall economic climate, especially in relation to interest rates and geopolitical factors, presents uncertainties. Orcel's statements reflect a strategic pivot to position UniCredit as a leading player in European banking, emphasizing the importance of maintaining stringent financial standards in any potential M&A endeavors. Overall, the combination of solid fourth-quarter profits and a proactive approach to dividends suggests a bank in transition, yet the identified revenue decline for 2025 signals potential challenges ahead that will require careful navigation in the coming years.