UniCredit Raises Profit Outlook Amidst Uncertainty Over BPM Deal

MILAN, May 12, 2025 – Italy’s second-largest bank, UniCredit, has announced an increase in its profit outlook for the year 2025, following a surprising uptick in its quarterly profits. However, the bank’s top executives remain cautious, particularly regarding potential mergers and acquisitions, emphasizing a strict approach to future deal-making.

Quarterly Performance Surprises Analysts

In its latest earnings report, UniCredit disclosed that its net profit for the first quarter surged by 8%, reaching €2.77 billion ($3.14 billion). This figure surpassed analysts’ expectations, which had projected an average profit of €2.36 billion. The bank attributed this unexpected growth primarily to rising fee and trading income, alongside a decline in operating costs.

As a result of its strong performance, UniCredit now forecasts a net profit of over €9.3 billion for 2025. This is an improvement from previous estimates suggesting the bank would only maintain profit levels similar to those from the previous year, after accounting for tax credits. CEO Andrea Orcel hinted at the possibility of further raising profit and distribution expectations if the current momentum continues throughout the year.

Cautious Approach to Mergers and Acquisitions

Despite the increase in profit prospects, challenges loom over UniCredit’s current merger proposals. On the table is a €14 billion all-share offer for Banco BPM. However, this deal is facing significant scrutiny following the Italian government’s imposition of stringent conditions for regulatory approval. Furthermore, UniCredit’s interest in acquiring a stake in Commerzbank is complicated by objections from the newly elected German government.

Orcel has made it clear that while he sees value in potential deals that could enhance the bank’s market position, UniCredit will not engage in transactions that do not align with its long-term strategy of being a strong standalone entity. He remarked, “I will not do that, and I’m very patient and calm, and the board is completely aligned,” referring to the importance of protecting shareholder value.

Strategic Partnerships and Future Outlook

In addition to its financial results, UniCredit has revealed a significant strategic move with the announcement of a 10-year partnership with Google Cloud. This collaboration aims to modernize UniCredit’s IT infrastructure, transitioning from legacy systems to advanced cloud-based solutions. The partnership indicates a broader trend among financial institutions striving to enhance their digital capabilities.

As UniCredit navigates through a competitive landscape characterized by rapidly shifting market conditions, the bank is positioning itself for future growth while carefully considering its options in the M&A space. Following the earnings report, shares of UniCredit experienced a boost, rising by 4%, outperforming the broader Italian banking index.

With the backdrop of cautious optimism in the banking sector, UniCredit’s ability to adapt and respond to both opportunities and challenges will play a crucial role in determining its trajectory in the coming months.

Reporting by Valentina Za; Editing by Giulia Segreti and Rashmi Aich

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