Bond Market News

Italy’s UniCredit reported a 70% YoY decline in net income to €247mn ($260.2mn) due to higher-than-expected Russia related provisions at €1.23bn ($1.3bn) in Q1. Total revenues were at €5.2bn ($5.5bn), up 7.3% YoY, driven by higher fees and net interest income. The bank planned €2.6bn ($2.75bn) in the form of share buybacks, a tranche of €1.6bn ($1.7bn) which will start as soon as they receive the ECB’s clearance, while the remaining €1bn ($1.05bn) share buyback is subject to the impact of Russia on its business. Regarding Russia, the bank said it trimmed its exposure to €7bn ($7.4bn). UniCredit’s extreme loss assessment stood at €5.2bn ($5.5bn) regarding its Russia exposure, based on certain financial, credit assumptions, and cross border recovery rate of 40%. As of Q1, its gross NPE (Non-performing exposure) ratio was at 3.7%, down 100bp YoY and the net NPE ratio was flat at 1.8%. For 2022, excluding Russia, UniCredit expects net revenue of €16bn ($16.9bn) and a net profit of over €3.3bn ($3.5bn). The bank’s CET1 ratio stood at 14%, down 100bp QoQ and down 200bp YoY.

Unicredit’s dollar bonds were trading weaker with its 3.875% Perp down 0.3 points to 80.42, yielding 8.74%.

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