And thank you so much for joining CNBC today on your Q3 numbers. So you upped your guidance once again after upping it back in July, already net revenue circa 24 billion from above 23, net profit above 9 billion. So what led you to up your guidance this quarter again?
Well, I think we have almost completed a period of transformation that brought this bank to a completely new run rate. We are five times the net profit we had in 2021, three times the return on tangible equity, two times the organic capital generation and distributions. And we now feel quite solid at that level, and therefore we now look forward to a period of sustainable quality growth. And we think we can sustain the 9 billion of net profit and grow from them in the future. So for us, it's kind of passing a strong message of confidence on our numbers and confidence on what UniCredit can do in the next three years.
So looking at your revenue up 2.6% for this quarter, of course it was an eye on what the NII would look like. Of course we see this going down with lower interest rates. Fees up 88.5% there. So how do you see the mix of this going forward and how can fees help you offset lower NII?
Well, on NII, one thing to note is that the sequential NII is flat. We have been very good with tilting the client and product mix in order to defend the NII, together with the usual pass-through discipline and everything else. But what we expected on fees is ahead of what we were expecting, and therefore as we move into 2025, we are confident about the resilience of our NII. It will go down, but we're confident about the resilience. We're confident about the fee trajectory, and therefore we think we can absorb the impact from rates, the impact from cost of risk normalization for us, the impact from compressing Russia, and still deliver a bottom line that is in line or better than the one of 2024.
So because you mentioned 2025, you also mentioned the full year 2025-2026 annual ambition of above 9 billion net profit and distribution greater than full year 2024. So here again, let's talk about next year and what things look like. You think you can continue with the momentum that we've seen over the past few quarters with 15 consecutive quarters of growth? You can project that going forward?
Well, we are very confident for a few things. I think the most important point for us is that as the environment normalizes, which for us is lower rates, higher cost of risk, and we compress Russia, we think that UniCredit will be able to demonstrate differential value versus our peer group. We have, in addition to all we've done on transformation, three things going for us. We start from an industry-leading set of results across all the metrics. From there, we have structural strengths – people have missed our exposure geographically, client and product, which is a great mix of profitability and growth which we will leverage further and it will become apparent. The second thing, we have some, what we call internally, idiosyncratic accelerators. For us, they are the tail of the transformation initiatives that we have ongoing, they are the lines of defense that are going to be released if they are not needed, and they are the strategic flexibility – so investment we can do to accelerate what we have today. Commerzbank is an example, Vodeno is another example. So these things will pitch in and allow us to go further. And then I think that we have demonstrated to have a team, a set of people that is passionate about UniCredit and creates alpha across the board. So we look forward to this normalization, what some people call headwinds, because I think it will allow us to demonstrate the differentiated value that we can bring.
You mentioned Russia a couple of times. Net profit there up 68%. So of course you filed an objection to the CJEU against the ECB order to wind down almost immediately Russian business. So can you tell us where you stand at the moment when it comes to Russia?
Well, if you look at our results, today we are going to take people through the fact that we had set targets for, well, in Q2 we had set targets for 2025. We basically achieved them already in one quarter. So at the moment, we said we would be below 2 billion in deposits, we are. We said we would be below 1 billion in loans, we are at 1.6 billion, but we have another few quarters to go. We said that we would eliminate the cross-border exposure, we're down more than 95%. And we said we would compress payments away from US dollar and Euro, and we have done exactly that. So our strategy since Q2 of 2022 hasn't changed, and it is an orderly wind down, and that is what we're doing. If anything, we're accelerating on that. So by the end of 2025, we will communicate new targets and we will be exactly where people would expect us to be.
And you mentioned the normalization of the environment can show what you can do. And of course we know that the big news this quarter is the investment that you made into Commerzbank. Now we heard 'surprise move,' 'aggressive,' 'unfriendly attack.' That's just some of the ways that some German leaders have qualified about your approach. So are you surprised about how surprised they are by this approach?
Well, let's put it this way: we wouldn't be here if we hadn't been invited to buy that stake. And it all started in a way that we thought was constructive. From there, that's the past, let's look forward. We are a key investor in Commerzbank, we have more than 21% in the bank. We are actually encouraged by the fact that now Commerzbank is calling for an investor day and is trying to improve its performance. We see Commerzbank and HVB as two mirror images. We have the same market share in corporate Germany, we have a similar market share in midland Germany. We are really a carbon copy of each other. And therefore it's very easy for us to say: well look at the results of HVB, look at the results of Commerzbank in Germany, they need to be very similar, they are not. So as an investor, or something more in the future, we're very keen to see that the management team will move in that direction.
Some voices in Germany say that the trust has been broken, that you bought a stake directly from the government but that you built another stake separately, and that that wasn't clear to them at that moment. Was there a breach of trust at that moment?
Well, I think that there are – I can only talk for UniCredit. UniCredit made an investment that was strategic, that is strategic. At the time, we had an opportunity to up it up to 21%, and we did. It is very consistent with our being keen to deploy our capital and extract value from it, either through an investment that returns a lot more as a management team of Commerzbank improves and goes better and better, or in a combination with us. And the future will see where that takes us.
