The Italian banking group reported an underlying net profit of €900m for Q1 2021 thanks to a rebound in revenues, despite a decrease in issuance and sales of structured products.
Unicredit has posted revenues of €4.7 billion for the first quarter of 2021, an increase of 7.1% compared to the equivalent quarter in 2020. The rise was driven by ‘a notable uptick in fees and trading,’ according to chief executive officer Andrea Orcel (pictured).
Trading income for the quarter was €639m, up €466m from Q1 2020, with client driven trading income up 87.1% year-on-year (YoY), thanks to a strong performance in fixed income. Non-client driven trading increased by €109m YoY mainly thanks to treasury.
In Germany, the group reported strong fees in investment (up 10.3% YoY) and financing (up 5.2% YoY), although net interest income, at €352m, was down 16.2% from the prior year quarter.
The bank collected approximately €130m from 1,115 structured products sold on the primary market in Germany in Q1 2021 – a decrease compared to sales of €200m (from 1,419 products) in the first quarter of 2020, according to SRP data.
The vast majority of its German offering (1,046 products worth €81m) was made up of certificates linked to a single share, of which Bayer (108 products), Allianz (83), and SAP (77) were the most popular.
However, the bank’s best-selling product in the period was an Express Plus Certificate tied to a worst of basket comprising the Dax and Eurostoxx 50 that sold €14m in March. It was one of just three products linked to an index basket which collected a combined €29m in Q1 2021.
Equities aside, Unicredit also issued eight fund-linked certificates (€0.4m) and two credit-linked notes (CLN) (€1.9m) during the quarter.
It also issued some 53,128 leverage certificates and 12,060 flow certificates in the period (Q1 2020: 73,060 leverage certificates and 20,356 flow certificates).
In its home market of Italy, total revenues of €1.7 billion were level compared to Q1 2020, but net interest income was down 5.3% quarter-on-quarter due to Euribor impact and overall customer rate reduction. The bank issued 12 public offers in the quarter, including a capital-protected certificate on the Euro iStoxx ESG Leaders 50 NR Decrement 5% that sold €12m.
The bank was also active in the Central and Eastern Europe (CEE) region, issuing structures in the Czech Republic (32 products worth CZK45m (US$2m)) and Slovakia (eight products worth €0.32m), among others. Both Czech and Slovak issuance was limited to reverse convertible certificates linked to single stocks, of which the share of Halliburton was the most frequently used (five products) in the former while Bayer (four products) was preferred amongst Slovak investors.
In CEE, total revenues stood at €851m (Q1 2020: €959m), with fees down 4.4% YoY at constant FX, mainly due to financing fees (-15.4%), because of prolonged lockdowns in the region.
As of 31 March 2021, the group’s reclassified balance sheet included €98.9 billion worth of debt securities issued, up 3.9% YoY.
In January 2021, Unicredit issued €2 billion dual tranche senior preferred bonds in five- and 10-year format, that are part of the 2021 funding plan. The 2021 issuance plan is skewed towards minimum requirement for own funds and eligible liabilities instruments. The group is fully compliant with the total loss absorbing capacity requirement of greater than 19.5% with a Q1 2021 TLAC transitional ratio of 27.30%.
Click the link to view the Unicredit Q1 2021 group results and presentation.