UniCredit: 3Q20 & 9M20 Group Results. A pan-European winner supporting all stakeholders from a position of strength
On 4 November 2020, the Board of Directors of UniCredit S.p.A. ("UniCredit" or "the Group") approved the 3Q20 and 9M20 Consolidated Results of UniCredit Group as at 30 September 2020.
Improved economic conditions across Western Europe resulted in increased client activity, which together with continued cost discipline allowed the Group to confirm underlying net profit targets of above €0.8 billion for FY20 and €3 to €3.5 billion for FY21. Underlying balance sheet strength means UniCredit is well positioned to continue to support all stakeholders from a position of strength.
The Group saw improved commercial performance as lockdowns were eased in most of its key markets towards the end of 2Q20. Overall revenues were up 4.4 per cent in comparison with 2Q20 but down versus 3Q19, a particularly strong quarter for the group.
Strict operational discipline ensured that Covid-19 specific costs were fully offset for the period. Total costs were down 1.5 per cent compared with 3Q19 as FTE reductions and lower variable compensation more than balanced higher IT investment and real estate spend in line with its Team 23 strategic plan. Maintaining its conservative provisioning and strict underwriting discipline, UniCredit reconfirms its FY20 stated cost of risk guidance of 100 to 120 basis points.
All business divisions were profitable in the quarter with CIB and CEE the main contributors to performance in 3Q20.
Thanks to active balance sheet management, UniCredit's asset quality reflects its conservative risk and underwriting approach, with a Group Gross NPE ratio excluding Non Core better than the European average using EBA's definition . The Group's Non Core rundown remains fully on track thanks to successful disposals following proactive measures initiated prior to the Covid-19 pandemic and continuously carried out even in such an adverse scenario.
Jean Pierre Mustier, Chief Executive Officer of UniCredit S.p.A. :
"Thanks to our very strong capital and liquidity positions, we will continue to support our customers whatever the environment. UniCredit was primed and ready for increased client activity as lockdowns eased across Western Europe, and we are here for our communities now in the face of the emerging Covid-19 second wave.
We continue to benefit from the successful execution of Transform 2019 as well as our Team 23 initiatives, and thanks to the acceleration of business model changes we have improved our gross savings target for Team 23 by 25 per cent to €1.25 billion. We are on track to meet our FY20 underlying net profit target of over €0.8 billion and confirm our FY21 target of €3 to €3.5 billion.
Conservative provisioning and strict underwriting discipline based on realistic assumptions are trademarks of our Group. We reconfirm our FY20 stated cost of risk of 100 to 120 basis points, thanks to our willingness to conservatively anticipate future impacts  as well as seasonality in 4Q20. We also confirm our FY21 stated cost of risk target at the bottom end of our 70 to 90 basis points range with underlying cost of risk  close to 60 basis points.
We remain fully committed to reinstating our Team 23 capital distribution policy, which combines 50 per cent of underlying net profits as a mix of cash dividends and share buybacks and a gradual distribution of excess capital starting in 2021 subject to receiving regulatory 'green light'.
Culture and values are fundamental in times like these, and we will continue to always "Do the right thing!" for all our stakeholders and always put the health and safety of our employees and customers first.
I want to thank each and every one of our employees for their commitment, resilience and continuing hard work in these exceptional circumstances. Together we make sure UniCredit is a pan European winner."
 3Q20 CET1 ratio transitional at 15.15 per cent with MDA transitional buffer at 612 bps; CET1 MDA requirements decreased from 9.04 per cent in 2Q20 to 9.03 per cent in 3Q20 thanks to CcyB.
 Subject to the ECB final recommendation on European banks capital distribution, expected in 4Q20.
 Source: EBA risk dashboard (data as at 2Q20). Using the EBA definition, UniCredit's Gross NPE ratio excluding Non Core stood at 2.7 per cent, which remains lower than the weighted average for all European banks at 2.9 per cent.
 Increased overlays, proactive classification and regulatory headwinds including new Definition of Default.
 Underlying CoR: defined as stated CoR excluding regulatory headwinds.