UniCredit shares surge on share buyback after record Q4

Shares in UniCredit surged on Tuesday after the Italian bank said it would return €5.25bn to shareholders after posting a record quarterly profit.

Bank boss Andrea Orcel said he was confident European Central Bank supervisors would green-light the plan, under rules on share buybacks that require approval.

"We've had extensive discussions with the regulators over the distributions and we feel very confident that we will get authorisation to execute them," Orcel said.

European banking supervisors have urged lenders in the bloc to prudently preserve capital while higher rates and energy bills cloud the economic outlook.

However, the receding chances of a recession in the bloc as the energy price squeeze eases have boosted banking shares, with investors less wary of regulators hindering generous capital distribution plans.

Unicredit reported a net profit of €2.46bn for the three months to December 31 - more than twice the €1.10bn forecast by analysts.

The figure was boosted by €852m in tax credits stemming from past losses which UniCredit was able to release. This offset a rise in default provisions to €1.8bn from €1.3bn.

Lending income rose 38% quarter on quarter and 43% from a year earlier, as the gap between lending and savings rates widened. Quarterly revenue rose to €5.72bn, better than forecasts.

Reporting by Frank Prenesti for Sharecast.com