UniCredit lifts outlook after breaking ties with Banco BPM.

UniCredit Shares Surge After Q2 Profit Jump and Withdrawal of Banco BPM Deal

Key Takeaway: Investors welcomed UniCredit’s strong second‑quarter earnings, while the bank’s decision to abandon a contested bid for Banco BPM lifted its shares above four percent on Milan.

Financial Highlights

• Net profit climbed to 3.3 billion euro (≈$3.9 billion), a near 25 % rise from the 2023 figure.
• After excluding one‑off items, profit stood at 2.9 billion euro, up 8 % and outpacing analysts’ average forecast of 2.5 billion.
• Revenues dipped by 3.3 % to 6.1 billion euro, partially offset by hedging costs linked to UniCredit’s 9.9 % stake in Commerzbank.

Share Market Reaction

By mid‑morning, UniCredit shares briefly touched 60.77 euro (≈4.6 % gain) on the Milan exchange. In contrast, Banco BPM’s stocks fell as much as 4.6 % to 9.82 euro amid the deal’s collapse.

Strategic Outlook for 2025 and Beyond

• UniCredit raised its 2025 net income target to 10.5 billion euro, above the prior expectation of 9.3 billion.
• Projected 2025 net revenue exceeds 23.5 billion euro.
• The bank anticipates further gains from the internalisation of life‑insurance operations and equity consolidation of Alpha Bank and Commerzbank.
• A 3.6‑billion‑euro share buyback programme is slated to launch in the near term.

Backdrop to the Withdrawal

Originally valued at 10.1 billion euro (≈$11.9 billion), UniCredit’s bid for Banco BPM encountered a protracted tug‑of‑war since November, pitted against Italian government mandates. The government invoked the so‑called “golden power” provision in April, citing national security concerns over the bank’s operations in Russia.

Under the provision, UniCredit would need to maintain Italy’s loan level for a specified period and cease all activity in Russia. These constraints, combined with regulatory uncertainty, ultimately drove the withdrawal.

Regulatory and EU Context

• Italy’s financial market regulator, Consob, suspended the bid for 30 days citing an “uncertainty” surrounding the offer.
• Despite the extension, chief executive Andrea Orcel noted that clarification on the “golden power” was unlikely within that window.
• The European Commission warned Italy could be in violation of EU law with the provision, emphasizing the need for clearer rules governing strategic sector takeovers.

CEO Statement: “We look forward to resolving this debate within Europe and strengthening the banking union, a vital initiative for the continent’s future.”