UniCredit to set aside €1.1bn to avoid paying one-off windfall tax

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Milan-based UniCredit said it would set aside €1.1bn as “non-distributable reserves” for 2024 instead of paying Italy’s one-off bank windfall tax, in a move analysts said might set a trend for other lenders.

The decision by Italy’s second-largest bank came after the country’s parliament amended the levy to offer lenders an alternative to paying the tax on their net interest income. 

Unicredit’s announcement on Tuesday is the first by a top Italian lender and comes as it upgraded its net revenue forecast for the year to €22.2bn from €21.5bn, driven by rising interest rates that have led to a higher than expected net interest income.

Unicredit’s net profit for the third quarter was €2.3bn, up 36 per cent year on year, beating analyst forecasts of €1.93bn.

The large margin was the motivation for Italy’s rightwing government coalition to introduce the levy over the summer. Prime Minister Giorgia Meloni’s cabinet had been critical of banks for reaping excessive profits from rising interest rates without passing on the benefits to customers. 

The parliament last month introduced amendments to the planned measures as a way to reduce the impact of the levy on lenders’ balance sheets after the surprise announcement sent banking shares plunging in August. 

Unicredit’s decision could be followed by other lenders, analysts said, significantly hampering the impact of the one-off levy, which the government initially estimated would earn some €3bn.

The lender also confirmed its 2023 profit and shareholder distribution targets, as third-quarter profits jumped 36 per cent year on year, and forecast the net interest margin for the full year to come in at €13.7bn, resulting in an improvement to its revenue guidance. 

However, UniCredit chief executive Andrea Orcel told a conference call it was too early to raise profit and distribution guidance.