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(Bloomberg) — UniCredit SpA posted a record quarterly profit, strengthening Chief Executive Officer Andrea Orcel just before his takeover bid for Commerzbank AG gets submitted to investors.
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Net income in the period increased 16% from a year earlier to €3.22 billion ($3.76 billion), according to a statement Tuesday. That was higher than all estimates.
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UniCredit also upgraded its full-year profit outlook to at least €11 billion and confirmed its 2028 targets.
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The lender has “confidence in the durability of our earnings” although it also warned that the Iran war will weigh on the global economy. Its home market Italy is “among the European countries most exposed to the energy shock,” it said.
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The results give a boost to Orcel as he seeks to gain control of Commerzbank through an offer that’s set to start as soon as Tuesday. The veteran dealmaker has been pursuing the German lender since September 2024, when he first disclosed a stake and subsequently expanded it to just under 30%.
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The German government, which owns 12% in Commerzbank, is strongly opposed to the deal. The bank’s management has rebuffed Orcel’s approach as well.
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A deal would turn UniCredit into a major force in Europe’s largest economy.
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Structured with little premium, the bid aims to lift UniCredit’s holding just above the 30% threshold that triggers a mandatory offer. This would allow the bank to increase its stake on the open market without having to launch a new bid.
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UniCredit expects to offer 0.485 of its own shares for each Commerzbank share, implying a valuation of about €33.6 billion at Monday’s close. That compares with the German lender’s market value of around €36.8 billion.
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UniCredit’s bottom line in the first quarter was boosted by higher revenue, driven by increased fee income and dividends from the bank’s equity investments that more than tripled.
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The CET1 ratio declined to 14.2% at the end of March, compared with 14.7% in the previous quarter. It was hit by hedges of equity investments, mainly driven by the increased consolidation of Alpha Bank.
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The lender said earlier this year it expects the CET1 ratio to be boosted by 56 basis points in the third quarter as it is set to receive regulatory approval to hold less capital for risks at the insurance businesses.
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Orcel has been reviewing outsourcing contracts for services such as custody, payments, asset management and insurance to reduce costs and improve services. Operating expenses declined 1.1% in the first quarter.
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New provisions for souring loans rose to €185 million, while so-called overlays against potential losses stood at about €1.7 billion.
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(Updates with more details on outlook in third and fourth paragraphs.)
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