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It is not an easy time to assess the financial sector in these unprecedented times. We had mixed feelings about UniCredit (OTCPK:UNCFF) and for the readers who have always followed us, we always chose Intesa San Paolo.
Shortly after invading Ukraine, UniCredit began a strategic review that may include selling the subsidiary in various options. However, the recent tightening of Western sanctions has further complicated the exit process for Western banks, and dealing with Kremlin-related issues has now become prohibitively expensive. For this reason, under the leadership of Vladimir Putin, UniCredit has established contacts with entities outside the country in order to increase the value of real estate. The CEO wants to avoid a write-down like that recorded by Societe Generale, which sold its entire stake in Rosbank and its insurance arms to Interos Capital, losing more than 3 billion euros.
It would not be right for Orcel to devalue UniCredit’s activities in Russia, on the contrary, it would be a gift to someone. CEO Andrea Orcell returned to talk about a potential exit from Moscow, which the Gay Aulenti group has been working on for the past few months. ,Our exposure to Russia has been rationally managed: we have reduced it, but it is not fair to devalue trade, nor is it consistent with sanctions. It would be like giving a billionaire deal to someone who vetoed for nothing “Speaking to Young Factor, Orcell explained. The banker recalled the presence of UniCredit in the country:”We have 4,000 employees and 1,500 companies for which we are commercial banks.” Stating that exiting the company would not only hurt Russia, but UniCredit would hurt European companies that are slowly trying to exit.
Furthermore, UniCredit’s Russian activities did not deteriorate in Q1. In fact, the group’s quarterly report shows that sales are up 79% qoq to €230 million. The high volatility of the ruble boosted trade, while the interest rate hike set by Moscow’s central bank had a very positive impact on interest margins, which rose 15.4 percent in the first three months of the year.
Positive news ahead and conclusion
UniCredit is strengthening its digital division with a series of events. The bank has just announced that Giovanni Damiani will lead Group Digital Excellence. In May, UniCredit’s €1.6 billion buyback plan was approved by the ECB, and in a 414-page document released this morning, UniCredit summarizes hundreds of security-buying micro-operations conducted between June 6 and June 10 were carried out. Weighted average price of €10.49. Buyback Since the first tranche, the bank has acquired over 66.8 million shares or 3.06% of the capital, valued at €683.3 million.
The €1.6 billion share buyback plan, which comes on top of €1.2 billion in dividends already paid, brings the funds available to shareholders for the year to €2.8 billion. With regard to Russia’s activities, we support positively UniCredit’s decision to be more peaceful than Societe Generale. As we mentioned last time, the bank can return its full capitalization in four years. Ratings and reviews are confirmed.
Previous reporting in the financial sector:
- Intesa Sanpaolo: Buy again at this price
- Euronext builds the European Nasdaq