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UniCredit has hailed its “best quarter in history” as it reported record net profits but signalled it would be selective in its dealmaking as the Italian banking industry stands on the cusp of a wave of consolidation.
The lender said on Monday it had made a net profit of €2.8bn in the three months to March, beating analysts’ estimates and prompting the bank to increase its full-year guidance.
Net commissions were also higher than expected at €2.3bn while net interest income was €3.47bn, slightly lower than anticipated by analysts.
UniCredit, led by industry veteran Andrea Orcel, is at the heart of a wave of attempted consolidation in the industry in Italy and Germany, though it has faced several setbacks including resistance from the countries’ governments.
Orcel said on Monday that mergers and acquisitions offered “interesting possibilities” but that UniCredit would only pursue deals that improve the company’s “strong and resilient standalone case”.
Its pending takeover of crosstown rival Banco BPM is in limbo after the Italian government imposed a series of conditions on any approval of the deal, including UniCredit’s full exit from Russia within nine months.
Orcel said the lender continued to work on an “orderly wind down of its Russia business” and would exit the retail market in the country by the first half of next year.
Other demands include a specific loan-to-deposit ratio and a commitment to buy Italian government bonds. UniCredit has voiced its opposition to such conditions and is due to negotiate with the government in search of a more palatable deal.
Meanwhile, Berlin has voiced opposition to UniCredit’s attempted takeover of Commerzbank in which the Milanese lender built a 29 per cent stake last year. UniCredit has also built a stake in insurer Generali.
Orcel said that although the macro environment had deteriorated, the bank had a “resilient” business model with “a high degree of visibility” on its earnings and shareholder distributions.
