Italian bank UniCredit has today posted better than expected 2021 results as the push by new chief executive Andrea Orcel to lift revenue began to bear fruit while costs remained in check despite rising pay and one-off charges.

UniCredit is the only bank Italian supervisors deem of global systemic importance.

It also confirmed today that it was no longer exploring a potential bid for Russian lender Otkritie Bank due to current geopolitical tensions with Moscow over Ukraine.

Orcel is betting on bold capital distribution plans to drive UniCredit's shares higher and the bank said it would distribute €3.75 billion to shareholders, with a €1.17 billion dividend and a €2.58 billion share buyback.

UniCredit shares, which currently trade at a discount to rivals, rose 2% in early trade, outperforming a flat Milan blue-chip stock index.

"Onwards and upwards," Citi analysts said, adding that the results were "already showing evidence on the new group strategy, and building for improving return overtime".

Orcel's track record in investment banking has fuelled expectations UniCredit will pursue a merger or acquisition.

This is despite it walking away from a rescue deal for rival Monte dei Paschi in October after failing to agree terms.

The former Merrill Lynch banker said UniCredit would continue to review its M&A options, but he ruled out pursuing deals of a size that would hurt UniCredit's goal of returning capital to shareholders in coming years.

"When I make a promise I keep it," he told reporters.

As of yesterday, UniCredit shares had climbed 19% since he pledged on December 9 to generate over €16 billion in capital by 2024 and give it to shareholders via dividends and buybacks.

Separately today, UniCredit said it had agreed to renew its insurance partnership accords with Allianz in Germany, Italy and central and eastern European countries.

Under the deal UniCredit will be able to distribute its own products through Allianz.

The two partners renewed their existing accords in Italy to 2027 with an option for UniCredit to have "strategic flexibility" from 2024.