(Sharecast News) – UniCredit reported its highest quarterly profit on record on Tuesday and raised its full-year outlook, as the Italian lender launched a 35 billion-euro equity stake in Commerzbank despite opposition from the German bank and Berlin.
Net profit rose 16% year-on-year to €3.22bn in the first quarter, ahead of the €2.7bn expected by analysts in the company’s consolidated earnings.
Revenue rose 4.9% to €6.87bn, and exceeded expectations by €6.42bn, as higher premiums, insurance income and dividends from equity investments offset pressure from low interest rates and the continued deterioration of UniCredit’s Russian business.
The bank raised its 2026 net profit forecast to at least €11bn, compared with previous guidance for that level, and confirmed its 2028 targets.
UniCredit said the improved outlook reflects early progress in its turnaround plan and continued strength in profitability and cash flow.
Chief executive Andrea Orcel said UniCredit delivered “record quarterly results” across all of its key financial metrics.
JPMorgan analysts said “while investor focus continues on M&A, UniCredit continues to deliver strong profits and cash distributions.”
The quarter was supported by approximately 400 million euros of dividends from equity investments made under Orcel’s dealmaking strategy. UniCredit has stakes in Commerzbank, Greece’s Alpha Bank and Italian insurer Generali, while also bringing its life insurance business in-house.
The bank said earnings also benefited from higher loan volumes, stronger fees and further cost reductions.
The results came as UniCredit opened its offer to Commerzbank shareholders, with the acceptance period starting on May 5 and running until June 16, according to Bloomberg.
The offer values Commerzbank at around 35 billion euros and suggests 0.485 UniCredit shares for each Commerzbank share, which is roughly €32 a share based on Tuesday’s opening price.
That was below Commerzbank’s market price of around €34.80, suggesting a low chance of broad investor acceptance without improved terms.
UniCredit said the offer was designed to raise its stake in Commerzbank to more than 30%, from below that level, rather than being immediately secured.
Exceeding that threshold would give UniCredit the flexibility to increase its holdings further through open market purchases from next year under German takeover rules.
Commerzbank had rejected this approach and was supported by the German government, which owns about 12% of the bank, in seeking independence.
UniCredit’s intervention had caused a political backlash in Germany, especially after it put forward proposals to improve the operations of Commerzbank, which the German lender described as a restructuring plan that would dismantle its business model.
UniCredit said its independent strategy will remain fundamental and that the Commerzbank offer is an additional opportunity to all outcomes.
The offer document also outlined expected improvements if the deal is completed, including savings at Commerzbank’s business center and IT optimization, which UniCredit estimates could generate €1.1bn in annual pre-tax value.
It also laid out measures that UniCredit said could create €0.8bn in pre-tax value if Commerzbank remained independent.
At 1155 CEST (1055 BST), shares in UniCredit were up 5% in Milan at €67.26.
Josh White of Sharecast.com reports.
