Italian banking giant UniCredit (LON:0RLS) announced on Wednesday its intention to initiate a €2.5 billion ($2.67 billion) tranche of the 2023 Share Buyback Program, subject to the green light from shareholders and supervisors. The announcement led to a 3.9% surge in UniCredit's share price, reaching €22.93 at 05:04 ET (09:04 GMT).
The bank's ability to launch such a substantial buyback is underpinned by its high capital levels and best-in-class organic capital generation, which has been bolstered by consistently strong financial performance, solid asset quality, and a structurally lower Cost of Risk. These factors have positioned UniCredit well to weather periods of macro uncertainty and front load a portion of its 2023 share buyback.
The total distribution target for UniCredit in 2023 is set at a minimum of €6.5 billion, up from €5.25 billion in 2022, translating to a total yield of over 16%. This move underlines UniCredit's commitment to attractive and sustainable shareholder returns while preserving capital strength. Proforma for this buyback tranche, UniCredit's CET1 ratio stands at 15.8% as at 2Q 2023.
However, the commencement of this buyback tranche is contingent upon approval by the company's shareholders at an Extraordinary Shareholders' Meeting (EGM) scheduled for October 27, 2023. Further details regarding the EGM will be released soon on the company's website. The buyback also requires approval from supervisory authorities.
UniCredit's announcement underscores its commitment to delivering attractive and sustainable shareholder returns while maintaining capital strength amid periods of macroeconomic uncertainty.
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