UniCredit hikes profit outlook after stakes in rivals, tax credits help 2025 income (updated)

Alpha Bank SA

09/02/2026 06:52

Commerzbank, Alpha stakes to add 1 bln euros in revenue in 2028

Strong Alpha partnership means nothing will change for now

Commerzbank deal to happen only if and when conditions are right

Updates share price in paragraph 2

By Valentina Za

MILAN, Feb 9 (Reuters) - Italy's second-largest bank UniCredit CRDI.MI raised its profit outlook on Monday and said it would for now sit on stakes in peers bought under CEO Andrea Orcel, while easing criteria for full deals.

The bank's shares rose 6% by 1502 GMT to their highest since late 2009, with Citi analysts saying investors were "happy to give credit to new targets" above market consensus.

Having previously guided for a net profit of 10 billion euros ($12 billion) in 2027, UniCredit said it was targeting 11 billion euros this year and 13 billion euros in 2028, with "exceptional" average growth of 7% a year from 2026 to 2028.

Cost cuts and revenue helped by contributions from a 26% stake in Germany's Commerzbank CBKG.DE and a 29.8% stake in Greece's Alpha Bank ACBr.AT will lift the return on equity stripped of intangible assets above 23% in 2028, the bank said.

It reported a 14% rise in net profit, excluding the boost from tax credits, to 10.6 billion euros for 2025.

    'GAME OF STAKES'

Under Orcel, UniCredit has invested, sometimes temporarily, in a number of rival financial institutions in what Mediobanca analysts have dubbed a "game of stakes", stopping short of a full merger.

While reiterating that 35 years in M&A had taught him deals were no "replacement for a bad (standalone) strategy and ...execution", Orcel lowered the minimum return targeted in deals saying he had been told he was "too conservative".

    "Now we look to beat the share buyback return plus the margin, no longer a 15% return on investment," he told analysts.

UniCredit shares have risen nine‑fold since Orcel's arrival in 2021, as he led the sector in returning record, rate‑driven profits to investors via buybacks and dividends.

After paying out 36 billion euros to investors in 2021-2025, UniCredit plans to distribute another 30 billion in the next three years.

    With bank valuations soaring, however, investors have less to gain from buybacks. UBS analysts calculated the buyback yield stands at "just 2.3% in 2026, making deals a more realistic strategic alternative now".

Ditched bids for Monte dei Paschi di Siena BMPS.MI and Banco BPM BAMI.MI have left UniCredit out of a domestic M&A wave.

    German opposition has so far blocked a takeover of Commerzbank, while Orcel said the Alpha partnership worked so well that nothing would change for now.

The Commerzbank and Alpha stakes will add 1 billion euros to net revenue in 2028 versus 2025. Net revenue slipped 1.4% last year to 23.9 billion euros, hit by a contracting lending margin and hedging costs on the investments. Such costs will total on average 500 million euros a year in 2026-2028.

Having set aside 1 billion euros in the fourth quarter to later fund voluntary staff exits, UniCredit pledged to cut overall costs to one third of revenue in 2028 from 38% last year.

     ($1 = 0.8450 euros)

 (Reporting by Valentina Za; Editing by Jamie Freed, Kirsten Donovan and Susan Fenton)

 ((valentina.za@thomsonreuters.com; +39 02 6612 9526;))