MILAN (Reuters) - UniCredit could have margins for shareholder payout on 2022 earnings higher than the previous year, which was already among the most generous in the European banking landscape.

Orcel said loan losses are still shrinking despite the expected economic shock from rising interest rates and the cost-of-living crisis.

"We see uncertainty, we all anticipate a potential shock, but the indicators are all very positive. The stock of nonperforming loans is coming down and the cost of risk continues to compress," he said.

UniCredit shares moved around 4 p.m.; analysts and traders point out that the rally in banking stocks and UniCredit in particular has already anticipated a positive close in 2022.

UniCredit will be the first Italian bank to report full-year results on January 31.

Asked whether the distribution to shareholders for 2022 could exceed 2021 levels, Orcel said, "Our ambition for capital distribution for 2022 was that it would be in line or higher than 2021, but based on the numbers we had at the nine-month end it may be higher," he said.

Last year UniCredit distributed 3.75 billion euros in dividends and share buybacks, equivalent to 100 percent of 2021 underlying net income, in line with Orcel's strategy of focusing on capital-generating activities to return to shareholders.

The bank's CEO pledged to achieve much of the three-year payout target of more than 16 billion euros even in the event of a "severe recession."

UniCredit has forecast a mild recession, and yesterday Orcel said the latest indications suggest that Europe may be able to avoid recession altogether.

The optimistic tone of bank CEOs, who are reaping the benefits of rising rates on lending margins while borrowing costs and loan losses are still low, contrasts with the call for caution from industry regulators dictated by the uncertainty of future prospects.

(Translated by Chiara Bontacchio, editing Claudia Cristoferi)