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UniCredit on Track for Transform 2019, Confirms Key Targets

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UniCredit S.p.A. (UNCFF - Free Report) is confident of meeting its fiscal 2019 targets. While confirming these, the company announced that it is fully on track to implement Transform 2019 — the basis of a long-term strategy built on five pillars.

The key targets include achieving overall return on tangible equity (RoTE) of more than 9% by 2019 with an improvement in the risk profile of the company.

The company also confirmed that the revenue target remains at 20.6 billion euros.

Given that a 0.1 billion euros reduction in net interest income is expected to be offset by higher assets under management (AUM) and strong transactional fees by the end of 2019, the revenue mix has changed. Now, the fee is likely to increase 0.1 billion euros to nearly 7.1 billion euros by 2019.

Further, as FTE reductions and branch closures progress ahead of the plan, the cost target for 2019 has been confirmed at 10.6 billion euros.

Because of the progress that has been made in relation to the plan, the European Central Bank (ECB) has reduced the company’s SREP Pillar 2 requirement to 200 basis points (bps), which accounts for a 50 bps reduction. This allows the CET1 MDA buffer after 2019 to be above 250 bps.

Further, given a solid capital position, the 2019 target for fully loaded CET1 ratio remains at above 12.5%.

Notably, the company announced that it will increase its dividend payouts for full-year 2019 from 20% to 30%. Further, once the upcoming regulatory impacts are confirmed, the payout ratio might increase up to 50% from 30% post 2019.

UniCredit’s Chief Executive Officer, Jean Pierre Mustier, also mentioned that the Group gross NPEs target has been reduced by an additional 4.0 billion euros for 2019.

Additionally, it was mentioned that the full rundown of the Non Core NPEs portfolio will occur by the end of 2025 and is self-funded.

Over the past six months, shares of the company have gained 14.8%, outperforming 9.5% growth for the industry it belongs to.



Currently, UniCredit has a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are KB Financial Group Inc. (KB - Free Report) , Credicorp Ltd. (BAP - Free Report) and Macro Bank Inc. (BMA - Free Report) .

The earnings estimate for KB Financial has been revised 15.1% upward for the current year over the past 60 days. Its share price has risen 47.3% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Credicorp’s earnings estimate has been revised upward by nearly 1% for the current year in the past 60 days. Also, over the last twelve months, its share price has increased 35%. The stock has a Zacks Rank #2 (Buy).

Macro Bank also carries a Zacks Rank of 2. Its earnings estimate for the current year has remained stable over the past 60 days. Its share price has seen rise of 85.7% in a year’s time.

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