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00:00:02
Speaker 1: Bloomberg Audio Studios. Podcasts, radio, news.
00:00:07
Speaker 2: You delivered another record quarterly profit ahead of expectations. At the moment, what is the driver going forward?
00:00:17
Speaker 1: Good morning, Francine. And yes, I'm very happy and very proud about what the team is achieving. They continue to surprise every quarter. This is our best quarter ever. A widespread beat, best in the sector, could not happen and could not happen better, could not have asked for any better. Revenues are up 12%, driven by core revenues, which now account for 90% of revenues. Costs continue to decline as we leverage change of model and AI. Our gross operating profit is a record, up 20%. Our cost-income ratio, which was already best in class, improved the most to below 33%. And our net profit is up 24%. We've now a return on tangible equity around 25%. So very, very strong quarter. But what is most important is the way it was achieved, exactly as we thought, leveraging gains of market share at flat margin and flat risk across all markets led by Eataly. and continue transformation of the operating machine, leveraging AI and changes in model to improve our efficiency. So we're getting exactly where we wanted to be and we are attacking Q4 and next year with momentum. So we're quite optimistic.
00:01:41
Speaker 2: A lot of the focus, Andrea, of course, will be what happens with Commerce Bank. So you said you'll launch something called Commerce Bank Unlocked, possibly with new governance at Commerce Bank. What does that exactly mean in terms of changes in management and what does this new governance look like?
00:01:59
Speaker 1: Well, the Cambridge Bank has been a story that has taken some time, but we're at the back end of it in terms of moving to control. All authorization are expected to occur by the end of November, but it's a lot sooner than we thought initially. And we now expect the shift of control, the new governance, and the ability to kick off Unlocked, which is fundamentally the phase one of our blueprint at Unicredit that we successfully implemented across 13 banks and successfully implemented at HVB as well, at Commerce Bank, as early as Q1. And therefore now we have an underlying unit credit that has momentum and that is probably going to perform better than we expected relative to our other plan. And we think we're going to be able to cooperate with Commerce Bank to superimpose on that a better performance of Commerce Bank really soon. So it is the right time and the two things are coming together at the right time. pace and hopefully as constructively as possible.
00:03:09
Speaker 2: But are you actually expecting to do changes to the supervisory board, to the management board? And what happens to the chief executive? Will she be replaced at Commerce Bank?
00:03:17
Speaker 1: I think the most important point is the secret sauce of Unicredit is to have everybody aligned, everybody positive, everybody excited and determined to achieve the objectives. and proud to achieve the objective. That is what we're going to seek to have at Commerce Bank. And I think once we engage with everybody and we show what the truth about Unicredit is, this will happen. The rest is just governance. But the core is to have the broad base at Commerce Bank, as we have in every other bank, committed, convinced and passionate to go and achieve what we think will get Commerzbank to become the best bank in Germany together with HBB.
00:04:08
Speaker 2: How have your discussions with the German governments evolved? Is there some kind of understanding on job cuts, on the Frankfurt listing, or what happens next?
00:04:20
Speaker 1: Well, we met and we continued to talk. I think both sides view this engagement as constructive and positive. We're very open to discuss and agree on a number of points that are very close to what both Commerce Bank and the government wish. And therefore, I'm quite optimistic that we will land an agreement that everybody can really celebrate and move on to the next phase.
00:04:51
Speaker 2: What do you think are the pillars of that agreement? Is there anything that you think you're nearly there in terms of locking it in?
00:05:00
Speaker 1: I think, let's say, more than an agreement, it's a reassurance that a number of the things we have said are exactly as we said. So, obviously, the discussion go around location, listing, commitment to the Mittelstand. I went on record saying that for us, this transaction is an opportunity to strengthen our support and our market share in the Mittelstand and in corporate Germany at large. So then there are social issues. I think there has been a lot of noise on different numbers. The numbers we've put forward are the number we've put forward, and they are vastly lower than what was rumored in the past. So I think that an agreement around that should be achievable. And then there are a number of other soft issues that we need to agree on. But at the end of the day, It does seem that more and more people are coming behind the execution of Unlocked at Commerce Bank and the achievement of a plan that will generate a lot of value. And more and more, the organization of Commerce Bank and HVB are more aligned and, let's say, more constructive in what will happen if and when they come together.
00:06:18
Speaker 2: Andrea, have you discussed with the German government what happens to the roughly 13% stake they have in Commerzbank? Will they sell off the stake?
00:06:30
Speaker 1: It is their decision, and I'm not going to comment on that, but I can only comment that as far as Unicredit is concerned, we're about 50% of Commerzbank. It is exactly the best place we could be. We're happy to remain there. We're happy to share with minority investors, including the government, on the acceleration of Commerce Bank. And eventually, if shareholders, employees, and the two institutions feel that this is a strong rationale, combining Commerce Bank and HVB, we hear a lot of people being positive on that. because the joining forces of such complementary franchises can accelerate a lot of things and give opportunities to a lot of people. Well, if that is the case, we're ready to consider that as well. So for the time being, we view the government as a very important shareholder with whom we have a good dialogue and they will take their decision on what they want to do. But our job is The same job as we do for ourselves is maximizing returns over time and strengthening the organization and make them be more and more impactful on the local economy.
00:07:46
Speaker 2: Andrea, Credit Agricole has now proposed a merger between Banco BPM and Credit Agricole Italia. You were after Banco BPM and then decided to abandon that. Do you feel left out? Do you feel like you're missing out on the consolidation opportunities in Italy?
00:08:02
Speaker 1: No, actually, and we discussed it many times earlier this year, and we were very clear multiple times. We thought the acquisition of BPM was a good deal at the time. It was not to be. We totally shifted gear. As you know, Italy upgraded their organic plan and expressed to everybody or indicated to everybody that we could achieve the same or more organically. From August to August, our market share in the targeted segments in Italy has increased 130 basis points. We're now running at 10 basis points of market share gain per quarter, sorry, per month. And this is before something that I had never seen in my career. A market where of the top seven banks, six are involved in M & A, which means integration, which means disruption, which means antitrust remedies. And one has a very focused plan with all the levers aligned to deliver it. So if we're gaining 10 business points per month now, we think we're going to accelerate in the next four to eight quarters.
00:09:20
Speaker 2: Andrea, very quickly, can we expect another big M & A after Commerzbank from you?
00:09:28
Speaker 1: I don't think so. I can't see. I think what Unicredit can deliver organically is far more than I can do through M & A.
00:09:37
Speaker 2: Andrea, as always, thank you so much for joining us.