On 05 May 2021, the Board of Directors of UniCredit S.p.A. ("UniCredit" or "the Group") approved the consolidated results of the Group as at 31 March 2021.
In 1Q21, the Group delivered revenues of €4.7 billion, boosted by a rebound in trading income and record fees which together more than offset persistent net interest income headwinds. The excellent fee performance was underpinned by very strong investment fees, testament to the strength of UniCredit's distribution network.
The Group's continued focus on cost efficiency and strong cost discipline resulted in significant operating leverage in 1Q21, leading to the lowest cost/income ratio in more than a decade at 51.5 per cent. This was possible thanks to faster than expected FTE reductions resulting in lower HR costs year on year and better Non HR costs year on year driven by lower travel and real estate expenses.
The stated cost of risk for the Group was very low in 1Q21 as a result of seasonality as well as write-backs and UniCredit's anticipation of future economic impacts taken in 2020. The FY21 underlying cost of risk is now expected to be below 60 basis points. This guidance includes modest overlay provisions through the rest of FY21.
The Group delivered a strong underlying net profit of €0.9 billion for 1Q21 thanks to a rebound in revenues, despite the ongoing impact of lockdowns on client activity in the quarter, as well as to a lower cost of risk.
UniCredit's rock solid balance sheet and strong capital and liquidity position are reflected in the fully loaded CET1 ratio at 15.92 per cent5 with a record-high fully loaded CET1 MDA buffer at 689 basis points and a Liquidity Coverage Ratio at 183 per cent in 1Q21.
In 2021, the ordinary distribution is €447 million, the cash distribution of €268 million was paid on 21 April 2021 and the SBB distribution of €179 million, approved by ECB and AGM, is expected to be completed by the end of 3Q21. In addition, a resolution for an extraordinary distribution after 1 October 2021 has been approved by the AGM in April for an amount of €652 million, entirely in the form of share buybacks, subject to ECB approval.
Combining the ordinary and extraordinary distributions for a total amount of €1.1 billion would equate to a total yield of around 6 per cent in FY21. The ordinary distribution policy is confirmed at 50 per cent of underlying net profit , with the cash dividend being accrued at 30 per cent.
UniCredit expects FY21 underlying net profit broadly in line with previous guidance with revenues broadly in line with the consensus. FY21 costs are confirmed in-line with FY19 levels. The full Non Core runoff by FY21 is confirmed.
The strategic review initiated following the arrival of the new CEO and the new Board of Directors is expected to be concluded in 2H21 and will be communicated at a Capital Markets Day.