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UniCredit SpA UCG

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Morningstar’s Analysis

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Unicredit Q2: Earnings Beat Driven by Lower Loan Losses, Lower Taxes, and Stronger Trading Income

Johann Scholtz, CFA Equity Analyst

Analyst Note

| Johann Scholtz, CFA |

No-moat Unicredit reported a net attributable profit of EUR 1 billion for the first quarter of 2021, more than double the EUR 420 million net profit it booked for the same period a year ago. The consensus of analysts collected by the company itself expected a net profit of EUR 736 million for the quarter. The earnings beat was driven by lower-than-expected loan loss provisions, a lower-than-expected tax rate, and higher-than-expected income from the trading of securities. The earlier announcement that Unicredit has entered into negotiations to take over troubled state-owned Italian lender MPS, however, overshadowed the results. We believe that the transaction could be beneficial to Unicredit shareholders, provided that the terms exclude the MPS bad-bank and that it is capital neutral. We maintain our EUR 11.50 per share fair value estimate and our no-moat rating.

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Company Profile

Business Description

UniCredit is one of the two largest Italian retail and commercial banks, but roughly half of its operations are outside Italy. It has a strong presence in Germany, Austria, and Central and Eastern Europe. It generates the bulk of its revenue from retail banking, but it also maintains a sizable corporate and investment bank.

Piazza Gae Aulenti 3 - Tower A
Milano, 20154, Italy
T +39 288621
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 80,879