By Valentina Za
MILAN (Reuters) -UniCredit will significantly improve its guidance for the current year when it presents third quarter results after hitting distribution goals on 2021, the Italian bank's CEO said, expressing confidence also on next year.
The upbeat comments delivered by Chief Executive Andrea Orcel at the Bank of America Merrill Lynch (NYSE:BAC) conference in London drove UniCredit shares up 6% by 1111 GMT, also lifting other banking shares.
Orcel said UniCredit had embarked on an industrial transformation which gave it strong commercial momentum, had ample provisions to absorb new impaired loans and could more than offset any weakness in fee income thanks to rising interest rates.
"This is what allowed us to deliver on promises for 2021 ... and 2022, given the guidance we have given you and that we will substantially upgrade in Q3," he said, adding this "gives us the confidence to do so also in 2023 given the lines of defence and momentum we have".
The former UBS investment banker said UniCredit had a good quality loan book, had put aside money against loan losses which had not materialised and could be used in the future, while it would also use strong earnings to further boost provisions this year.
Orcel said the bank had another buffer "unique almost only to UniCredit" to absorb possible shocks which it would discuss with third quarter results.
Markets fail to appreciate the transformation UniCredit has undergone, Orcel said, adding its shares underperformed those of peers because investors' "muscle memory" led them to expect the latest crisis to deal a similar blow to the bank as previous ones.
"Disruption, recession, uncertainty bring more opportunities than threats if an organisation is strong and makes the right decisions ... if you look at the last three crises we lost, I think we're determined not to lose this one," he added.