UniCredit pledged on Tuesday to return 5.25 billion euros ($5.69 billion) to investors based on its 2022 results, further hiking one of the most ambitious payout targets among European banks, after posting its best profit in over a decade.
The Italian bank said net profit came in at 2.46 billion euros in the three months through December, more than twice an average forecast of 1.10 billion euros ($1.2 bln) from analysts polled by the bank.
The figure includes an 852 million euro boost from the write-up of deferred tax assets.
"The year has gone very well, obviously," CEO Andrea Orcel told CNBC's Joumanna Bercetche Tuesday following the results.
"Particularly given that we started the year on the back foot with the envision of Ukraine ... We repositioned and we refocussed and then little by little we clawed back all the hit we got in Q1, and we finished the year on a ... high."
The lender paid out 3.75 billion euros to investors over 2021 results in dividends and share buybacks.
UniCredit said it expected to post a net profit in 2023 broadly in line with 2022 including its Russian business, after it had excluded this from its profit goal last year following Russia's invasion of Ukraine.
It also aims for a profit distribution target for 2023 in line with 2022.
Shares in the lender were 7.7% higher by 8.45 a.m. London time following the results.
UniCredit has failed to extricate itself from Russia where it owns a top 15 lender.
The bank said its core capital rose to 16% in the fourth quarter, from 15.41% at the end of September.
When taking into account its most recent distribution plans, which are subject to shareholder approval and, for the buyback part, supervisory approval, pro-forma core capital was 14.9%, still well above its target of 12.5-13.0%.
UniCredit said income from its core lending activity jumped 38% from the previous quarter and 43% from a year earlier, as tighter monetary policy widened the gap between rates banks charge on loans and those they pay to raise funds.
That drove overall quarterly revenues to 5.72 billion euros, above a 5.12 billion euro average forecast.
The bank announced a transformation plan — called UniCredit Unlocked — at the end of 2021.
"With respect to transformation, we're not there yet. The results prove that the bank is transformed, but what has really transformed is the commercial machine has come back to life," Orcel told CNBC.
"The ... operational machine takes more time. ... It's quite nice to see that the commercial machine is driving the bank forward while the rest has time to converge."
— CNBC contributed to this report.