MILAN, Feb 5 Reuters UniCredit stunned markets on Monday with a bumper 2023 profit which it said it would distribute entirely to shareholders, and pledged to match it this year despite a toughening backdrop.

Shares in Italy39;s secondbiggest bank jumped 10 to a nineyear high after the much stronger than forecast earnings, and upgrade to its outlook for a year in which interest rates are expected to start declining.

Other leading European banks that reported fullyear earnings last week struck a cautious note, in contrast to UniCredit39;s upbeat tone.

We face the future with optimism, CEO Andrea Orcel told analysts.

UniCredit shares are now at their highest level since May 2015, having surged nearly 250 since Orcel, former head of investment banking at UBS, took the reins in April 2021.

Stock is one of most loved in the sector, but the story continues to overdeliver, Citi analyst Azzurra Guelfi said.

The bank reported net income in the OctoberDecember period of 2.8 billion euros 3.01 billion, which includes a 900 million euro writeback of tax assets, and compares with a consensus forecast provided by Unicredit of 1.2 billion euros.

Even stripping out the tax writebacks, revenue confounded forecasts for a decline, rising 4.6 yearonyear.

Both income from lending and net fees strengthened from the previous quarter, while analysts had expected a weakening.

Provisions against loan losses in the fourth quarter were less than half what they had forecast.

The lender…