MILAN, Oct 27 (Reuters) – Italy’s UniCredit (CRDI.MI) is using mostly share buybacks to return capital to shareholders, rather than dividends, because that is what investors prefer, Chief Executive Andrea Orcel said in a shareholders’ meeting on Friday.

“This is what shareholders tell us when we speak with them,” Orcel told a meeting that approved a 2.5-billion-euro ($2.64 billion) share buyback.

Presenting quarterly earnings on Tuesday, Orcel said that UniCredit would consider increasing over time the cash portion of its distribution, which is “arguably low.”

With shares trading at between 5 and 5.5 times the bank’s forward earnings, “I think I am doing investors a favour by reducing the share count and boosting the yield going forward”, Orcel said.

“However, I do realize that as we progress, we need to provide people with a progressive dividend and that the percentage of net income that we need to pay out needs to gradually increase,” he added.

($1 = 0.9469 euros)

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