Founded in 1870, UniCredit S.p.A. is a Pan-European financial services company that is headquartered in Milan, Italy. The company offers diversified banking and financial services such as consumer and corporate credit, investments, insurance products, as well as wealth management to individuals and corporate clients. Modern-day UniCredit is the result of the 1998 merger of Unicredito and Credito Italiano. The company operates a lucrative divisional business model dubbed ‘One Bank’ that is based on central support and local excellence. Its broader business segments are Commercial Banking as well as Corporate & Investment Banking.
UniCredit has market-leading products throughout Eastern, Central, and Western Europe, and in 2013, it was described as the only systematically important bank in Italy. The bank has attained its current status through a series of strategic mergers & acquisitions as well as important partnerships in the 21st century. Its most notable buys include Italy’s Capitalia Group, Kazakhstan’s ATF Bank, and Ukraine’s Ukrsotsbank. Its most defining partnership was a 10-year agreement signed with IBM in 2013 that saw UniCredit chart a new growth phase defined by digital transformation. The company has slowed down in its M&A plays in recent years. It is now banking on its natural European footprint to drive organic growth by tapping into opportunities such as digital trends, cross-selling, customer loyalty, corporate innovation, and best-in-class services.
UniCredit is publicly listed on the Borsa Italiana, where it trades under the ticker symbol UCG. The stock is categorised in the Financial Services sector, under the Banks-Regional industry. The bank also has secondary listings on the Frankfurt Stock Exchange (ticker: CRI) and the Warsaw Stock Exchange (ticker: UCG).
UniCredit Stock History
The UCG stock has followed the path of most global banking stocks in the 21st century. It is a century that offered so much promise but delivered so little, with the banking industry particularly having to deal with the 2008 financial crisis, the Eurozone debt crisis, as well as the 2020 coronavirus pandemic.
The second half of the 1990s saw the UCG stock rise from €20-levels to circa €100 at the turn of the millennium. By late 2000, the stock had risen to circa €160. A period of price consolidation then followed, but upward momentum resumed in early 2013, and the stock embarked on a rally that saw it print its all-time high above €200 in April 2007. The effects of the 2008 Great Recession then triggered a massive sell-off that saw the stock plunge to lows of below €25 by March 2009. There was a brief recovery to circa €90 in late-2009, but the Eurozone debt crisis provided heavy headwinds that saw UCG stock tumble to circa €10 by mid-2012. The stock again attempted a recovery, but tough business conditions have limited any potential gains.
Despite the tough business environment, UniCredit has always been a consistent dividend payer. The bank has an attractive profit-sharing policy and has averaged a dividend yield of about 2% in recent years.
How to Trade UCG Stock
Here are some of the factors to consider when trading UCG stock:
- Legislative and Taxation policy – The financial industry has been under closer regulatory scrutiny since the aftermath of the 2008 Great Recession. Government and regulatory agencies have been imposing tougher rules to promote stability in the sector. For instance, UniCredit has often been accused of not adhering to liquidity ratios set by the ECB in recent years. The bank also has to deal with tax obligations in the various jurisdictions that it operates in. Sudden changes in legislative and taxation policies can significantly impact the margins of UniCredit.
- Economic Conditions and Monetary Policy – Banking stocks are very sensitive to economic conditions and the prevailing monetary policy. The UCG stock tends to drift higher during periods of economic boom and lower during periods of economic downturns. The stock is also reactive to the prevailing monetary environment. A higher interest regime denotes an expanding economy, and this will tend to push the stock upwards. On the contrary, a lower interest regime is indicative of a slowing economy, and this will tend to pressure the stock lower.
- Competition – Competition in the financial sector is fierce and is based on pricing, products, and reputation. UniCredit is dealing with ambitious and well-capitalised players locally and abroad. In Italy, the company has already lost the top spot to Intesa Sanpaolo following a local mega-merger. Regionally, UniCredit has to compete with the likes of BNP Paribas, Deutsche Bank, Royal Bank of Scotland, HSBC, and Standard Chartered Bank.
- Periodic Earnings Reports – The UniCredit fiscal year runs from January to December. The bank releases quarterly, semi-annual, and annual earnings reports that update investors on the health and performance of its business. Some of the metrics to watch out for include deposits, interest fees, funds under management, and gross profits. Positive numbers will tend to inspire higher UCG stock prices, whereas negative figures will typically drag the UCG stock lower.
Why Trade UCG Stock on the AvaTrade MT5 Platform
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** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.