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Investing.com - UniCredit shares rose in European trading on Wednesday, after the Italian bank posted stronger-than-anticipated quarterly earnings and lifted its full-year outlook.
The announcement came after the company said late on Tuesday that it had scrapped its bid to purchase rival Banco BPM due in part to government intervention in the process.
Speaking to CNBC, CEO Andrea Orcel said Unicredit (BIT:CRDI) had decided to "draw a line on this transaction," adding that "at some point you need to cut your losses" and "focus on what you control."
Orcel has overseen a drive by UniCredit to expand its operations, although the push has faced setbacks following a legal dispute with the Italian government, which had initially aimed to tie up Banco BPM with Monte dei Paschi. UniCredit has also clashed with Germany over its recent move to acquire Commerzbank (ETR:CBKG).
Still, UniCredit unveiled a full-year net profit outlook of around 10.5 billion euros, up from a prior guidance of over 9.3 billion euros, thanks to expense reductions and a smaller-than-projected dip in income from the difference between what it pays for deposits and rakes in from loans.
The bank also pledged to pay out at least 30 billion euros to shareholders from 2025 to 2027 through a combination of cash dividends and share buybacks.
A consolidation of a 9.9% equity stake in Commerzbank, although hitting returns in the second quarter due to hedging costs related to the move, is seen helping boost profits in 2026. A lift is also anticipated to come from a separate consolidation of a stake in Greece’s Alpha Bank (AT:ACBr).
Meanwhile, consolidating the entire 29% stake in Commerzbank it now owns is also expected to bolster profit in 2027. Income that year is tipped to be more than 11 billion euros, compared to a prior outlook of 10 billion euros.
For the three months ended in June, net profit was 2.9 billion euros, excluding one-off items, and 3.3 billion euros when folding these in. Analysts had anticipated 2.5 billion euros for the unadjusted number.
(Reuters contributed reporting.)