The UBI Banca Group Consolidated Results as at 30 th June th August 2014

Transcription

1 The UBI Banca Group Consolidated Results as at 30 th June th August 2014

2 Disclaimer This document has been prepared by Unione di Banche Italiane Scpa ("UBI") for informational purposes only and for use in the presentation of August It is not permitted to publish, transmit or otherwise reproduce this document, in whole or in part, in any format, to any third party without the express written consent of UBI and it is not permitted to alter, manipulate, obscure or take out of context any information set out in the document. The information, opinions, estimates and forecasts contained herein have not been independently verified and are subject to change without notice. They have been obtained from, or are based upon, sources we believe to be reliable but UBI makes no representation (either expressed or implied) or warranty on their completeness, timeliness or accuracy. Nothing contained in this document or expressed during the presentation constitutes financial, legal, tax or other advice, nor should any investment or any other decision be solely based on this document. This document does not constitute a solicitation, offer, invitation or recommendation to purchase, subscribe or sell for any investment instruments, to effect any transaction, or to conclude any legal act of any kind whatsoever. This document contains statements that are forward-looking: such statements are based upon the current beliefs and expectations of UBI and are subject to significant risks and uncertainties. These risks and uncertainties, many of which are outside the control of UBI, could cause the results of UBI to differ materially from those set forth in such forward looking statements. Under no circumstances will UBI or its affiliates, representatives, directors, officers and employees have any liability whatsoever (in negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection with the document or the above mentioned presentation. For further information about the UBI Group, please refer to publicly available information, including Annual, Quarterly and Interim Reports. By receiving this document you agree to be bound by the foregoing limitations. Please be informed that some of the managers of UBI involved in the drawing up and in the presentation of data contained in this document either participated in a stock option plan and were therefore assigned stock of the company or possess stock of the bank otherwise acquired. The disclosure relating to shareholdings of top management is available in the annual reports. Methodology The notes on the reclassified financial statements contained in the periodic financial reports of the Group may be consulted for a fuller comprehension of the rules followed in preparing the reclassified financial statements. 2

3 Executive summary: strong balance sheet ratio confirmed BASEL 3 CAPITAL RATIOS phased-in JUNE 14 CAPITAL INDICATORS 18 0% March 14 (excluding profit) 12.7% CET % CET 1 (fully loaded) CET 1 pro-forma: fully loading the new regulatory 18.0% framework to March and June 14 data TOTAL CAPITAL RATIO 17.7% 11.2% 11.7% Mar '14 pro-forma (excl. profit) June '14 pro-forma ~10.9% June '14 fully loaded at regime CET 1 at regime: fully applying the new regulatory framework and including a prudential approach to credit and market parameters, and the estimates of the JV Aviva and JV UBI Assicurazioni transactions. No optimisation actions or self financing are included LIQUIDITY POSITION LEVERAGE RATIO* (Basel 3) LCR & NSFR 5.2% >5.8% >5.4% > 1 >1 >1 >1 Dec '13 fully loaded at regime June '14 phased-in June '14 fully loaded at regime Mar '14 June '14 LCR and NSFR > 1 also net of LTRO TLTRO Estimated 3 bln/ take up in December 2014 (vs. 6 bln/ expiring LTRO in Jan 15) * According to Basel 3 definition of Leverage Ratio, the tier one capital must be equal to at least 3% of on- and off-balance-sheet assets 3

4 Executive summary: improving profitability and cost control capacity confirmed OPERATING INCOME 1H13 1H14 % change 1,652 1,736 NET INTEREST INCOME % +5.1% NET COMMISSION INCOME % 1H13 1H14 NET RESULTS FROM FINANCE % 1H13 1H14 % change OPERATING EXPENSES STAFF COSTS % 1,072 1, % OTHER ADMINISTRATIVE EXPENSES % 1H13 1H14 D&A % NET OPERATING INCOME % Notwithstanding +11.8% in LLPs PRE-TAX PROFIT 1H13 1H14 % change NET PROFIT % % 1H13 1H14 NET PROFIT net of non-recurring items % ( mln) 4

5 First signs of loan book stabilisation in 2Q14. Confirmation of low risk concentration portfolio Net volumes in bln 30 June '13 31 Dec '13 31 Mar '14 30 June '14 %Q Qo Q changes Retail % of which: Private Customers % Small business % UBI Banca 1 (former Banca 24/7) % 2 Prestitalia % Corporate % 0.0% of which: Core corporate % Large corporate % UBI Banca (former Centrobanca) % Pi Private Other % % of which: UBI Leasing % UBI Factor % 3 UBI Banca % Risk concentration Fractioned and diversified lending policy contained risk ik concentration, ti in progressive reduction since 2007: Customers Largest 10 Largest % 2.7% 2.6% 12.1% 7.9% 7.7% Total lending % Total gross lending book Small business: turnover up to 15 mln Core Corporate: turnover from 15 to 250 mln Large Corporate: turnover > 250 mln 1 Following the merger of Banca 24/7 in UBI Banca, effective July 2012, UBI Banca is managing the remaining stock of non captive mortgages and personal and special purpose loans. Prestitalia is managing the salary backed loan operations 2 Minor companies, IAS adjustments, loans not segmented to commercial portfolios and intercompany eliminations 3 UBI net of intercompany 5

6 M/L Term lending volumes trends show: 1) an improvement in new lending inflows in Network Banks with a rising new origination/reimbursement ratio at 104% in 2Q14 2) an ongoing low credit demand for product companies 3) further reduction of stocks in run-off All together a good relative growth in new origination but not enough for absolute growth STOCK 1 ~63.2 bln/ FOCUS ON MEDIUM / LONG TERM LENDING (~73% of TOTAL LENDING) NETWORK BANKS: New origination 82% 85% 90% 82% ~ 44.5 bln = ~ 44.4 bln/ in Mar 14 Reimbursement 95% 104% 99% in 1H14 (vs 83% in 1H13) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 SEMESTER COMPARISON New Origination (M/L term loans) Segment 1H14 / 1H13 2 Private Customers +33% Corporate Sector Small Business +34% +16% PRODUCT COMPANIES New origination ~ 12.0 bln/ = 42% in 1H14 (vs 35% in 1H13) ~ 12.4 bln/ in Mar 14 Reimbursement STOCK IN RUN-OFF ~6.7 bln/ ~ 6.8 bln/ in Mar 14 Portfolio in run off: 6.7 bln/ end June 14, 6.8 bln/ end March 14, 6.9 bln/ end December 2013, mainly former Banca 24/7 and Leasing 1 As at 30 June 2014, including NPLs, management accounts; 2 Net of mortgages granted to Group employees 6

7 Stable core funding (current accounts and retail bonds) with improving mark-down and further optimisation of higher cost items IAS amounts in bln June '13 Dec '13 Mar '14 June '14 quarterly % c hanges Loan to Deposit Ratio 96.6% DIRECT FUNDING FROM ORDINARY CUSTOMERS % 13% ~80% of total direct funding Current accounts & deposits (other than CCG) % Term deposits, other payables and repos % Securities in issue: Network banks + UBI % Extra-captive customers* % Other (mainly customer CDs) % Stable current accounts & deposits Strong placement power of retail bonds confirmed DIRECT FUNDING FROM INSTITUTIONAL CUSTOMERS % ~20% of total direct funding Securities in issue: Covered Bonds % EMTN % CD and ECP % Preferred shares n.s. Repos with CCG % New issuances welcomed by institutional markets in Jan/Feb 14: 1 bln/ Covered Bond and1bln/ Emtn (vs. 0.9 bln/ Emtn matured) Preferred shares redeemed in Mar 14 TOTAL DIRECT FUNDING % 07% AUM % Bancassurance % AUC % TOTAL INDIRECT FUNDING % Among AuM, mutual funds and SICAV stocks up by 2.2 bln/ (+11.4%) June 14 vs. June 13 Positive placement of bancassurance products, with an increase +5.8% in stocks June 14 vs. June 13 TOTAL DIRECT + INDIRECT FUNDING % * Bonds placed on third party banks networks 7

8 Bond securities maturities programmed so as to be fully sustainable: new issuances at significantly lower spreads New Issuances Replacement rate: > 100% Decreasing spreads Spread vs. 6M Euribor (bps) FY12 FY13 1Q14 2Q14 RETAIL BONDS: Maturity Profile (Nominal amounts in bln, net of bond repurchases) Matured H14 3Q14 4Q and following Issuances in 1H14 In January 2014 issued: INSTITUTIONAL BONDS: Maturity Profile (Nominal amounts in bln) bln of Covered Bond (maturity Feb 2024, fixed rate 3.125%) The outstanding residential covered bond program was enlarged to 15 bln/ In February 2014 issued: 1blnofEMTN (maturity Feb 2019, fixed rate 2.875%) Matured H14 EMTN Q14 4Q14 COVERED BONDS* and following * Inclusive of 0.5 bln/ of private placement with BEI expiring within Further 1.7 bln/ retained issue not included 8

9 Italian Govies proprietary portfolio at around 20 bln/ (21 bln/ in March 2014) strongly contributing to total eligible e assets Italian Govies: ~ 92% of Financial Assets Eligible Assets: 31.1 bln/ (net of haircut) ( mln) TOTAL 19,738 21,126 20,283 HTM 3,087 3,113 3,050 2,590 3,435 1,660 HFT AFS 14,061 14,578 15, Dec Mar June 2014 Data as at mid-july 2014 Eligible assets breakdown % Italian Govies ~ 63% Gov. Guaranty bonds ~ 10% Retained securitisations ~ 11% Retained covered bonds * ~ 10% Other (ABACO) ~ 6% On 7th August 14 obtained authorisation for early reimbursement of the residual 3 bln/ State guaranty bond Maturity Profile (market values, bln) Modified duration of Italian Govies portfolio: 0.7 years Use of eligible assets** AFS HFT HTM Unencumbered Pledged for LTROs*** CCG Repos 17.4 bln/ 12.3 bln/ 14bln/ 1.4 ~41% of short term deposits 2H Over AFS Reserve on Italian Govies: +112 mln/ as at 30 th July 2014 * 1.5 bln/ on the 15 bln/ Retail Mortgages CB Programme, 1.7 bln/ on the 5 bln/ Commercial Mortgages CB Programme (net of haircut) ** 6 bln/ of LTRO were taken in December 2011 (expiring in Jan 15), further 6 bln/ in February 2012 (expiring in Feb 15) *** Including among others interest expense accrued 9

10 Stated Net Profit: 106 mln/ in 1H14 vs. 53 mln/ in 1H13 MAIN INCOME STATEMENT ITEMS Figures in mln 1H13 1H14 % change 2Q13 1Q14 2Q14 % change 2Q14 vs 2Q13 % change 2Q14 vs 1Q14 Net interest income % % ( 0.1%) Net commission income % % 3. 2% Net result from finance % % 18.2% Other income items (14.9%) (24.6%) 23.6% Operating income 1,652 1, % % 3.4% Staff costs (646) (648) 03% 0.3% (315) (326) (322) 22% 2.2% (1.3%) Other administrative expenses (335) (311) (7.2%) (174) (153) (159) (8.6%) 3.9% Net impairment losses on property, equipment and investment property and intangible assets (90) (85) (5.7%) (45) (43) (43) (5.4%) 0.3% Operating expenses (1,072) (1,044) (2.6%) (534) (521) (523) (2.0%) 0.4% Net operating income % % 8.2% Net impairment losses on loans (384) (429) 11.8% (226) (199) (230) 1.9% 16.0% Net impairment losses on other financial assets and liabilities (17) (2) (88.4%) (9) 2 (4) n.s. n.s. Net provisions for risks and charges (12) (3) (76.7%) 7%) (9) (10) 7 ns n.s. ns n.s. Profits (losses) from disposal of equity investments 1 (0) n.s. 2 (1) 0 n.s. n.s. Pre-tax profit from continuing operations % % 6.7% Taxes on income for the period from continuing operations (103) (135) 31.3% (47) (59) (77) 64.8% 30.6% Profits for the period attributable t bl to non-controlling interests t (13) (16) 24.5% (3) (8) (8) n.s. 5.3% Profit for the period % % (17.3%) Profit for the period NET OF NON-RECURRING ITEMS % % 21.6% Taxes on income include non-recurring items related to: increase from 12% to 26% of the substitute tax on revaluation of Bank of Italy stake for -4.5 mln/ (or -3.7 mln/ net of minorities) impact from change in IRAP* tax rate of existing DTA: mln/ PPA allocated line by line * IRAP = regional production tax 10

11 Net Interest Income at: 909 mln/ in 1H14: +7.5% vs. 1H13 and +0.4% vs. 2H mln/ in 2Q14: +6% vs. 2Q13 and flat vs. 1Q14 Half year evolution 1H14 vs. 1H13: differential contribution ( mln) ( mln) % H13 2H13 1H14 NII Loans Funding Financial NII in 1H13 activities In 1H14 Change in avg. volumes -4.3 bln -2.4 bln +1.3 bln Quarterly evolution ( mln) Main trends in NII determined by: % constant t improvement in customer spread......thanks to optimisation of funding structure and strong improvements in markdown 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 and notwithstanding decrease in average lending volumes 11

12 Net Interest Income: contribution from business with customers and from financial assets NII from BUSINESS 1Q13 2Q13 1Q14 2Q14 with CUSTOMERS ( mln) See annex 5 for details Pricing (average bps on stocks*) Average interestbearing volumes ( bln) Mark-up Customer Spread (UBI Banca Group) Mark-down Lending Funding Mar '13 June '13 Mar '14 June '14 ~ 80% of NII generated by business with customer benefiting from constant improvement in customer spread: unvaried mark-up notwithstanding lower avg. lending volumes lower mark-down notwithstanding recent higher avg. funding volumes NII from FINANCIAL ASSETS & 1Q13 2Q13 1Q14 2Q14 INTERBANK EXPOSURE ( mln) Yield of financial portfolio net of funding cost (bps) Financial asset average volumes ( bln) Mar '13 June '13 Mar '14 June '14 * Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI) Positive evolution of net yield on financial portfolio sustained by lower interest rate on LTRO 12

13 Net Commission Income. Positive 6 months and quarterly progression: +1.2% YoY and +3.2% 2Q14 vs. 1Q14 notwithstanding lower intermediated volumes See annex 6 for details ( mln) Half year evolution +1.2% Net Commission Income (mln ) 1H13 1H14 1H14 vs 1H13 Guarantees (on State Guaranty Bonds) (23.1) (15.7) 31.8% Banking Services Commissions % Securities Management, Trading & Advisory Services % Total % Performance affected by sluggish economy and decreasing avg. loans (-5.1% YoY) Good performance thanks to better market conditions and good performance in AuM 1H13 1H14 ( mln) Quarterly evolution +4.1% +3.2% Net Commission Income (mln ) 2Q13 1Q14 2Q14 2Q14 vs 1Q14 Guarantees (on State Guaranty Bonds) (11.6) (10.1) On 7th August 14 obtained authorisation for early reimbursement of the residual 3 bln/ State guaranty bond 2Q14 vs 2Q13 (5.6) ( 44.5%) ( 51.6%) Banking Services Commissions % 4.2% Securities Management, Trading & Advisory Services % +8.6% 2Q13 1Q14 2Q14 Total % +4.1% * Includes FX negotiations and excludes performance fees 13

14 Cost control capacity confirmed in 1H14: total operating costs -2.6% YoY mainly upheld by staff cost trends and significant effort in other administrative expenses containment ( mln) -2.6% 1,072 1,044 Total oper. costs % % % 1H13 1H14 D&A (incl. PPA*) Other Adm. Expenses Staff costs Staff costs flat, notwithstanding inclusion of progressive increases as from 1 st June 2013 and 1 st June 2014 set out in the National Labour Contract in force From 1st July 2014, 183 exits**, as per March 14 trade union agreement Total operating costs ( mln) of which Staff costs ( mln) of which Other admin. expense ( mln) % +0.4% +2.2% 2% -8.6% 86% -1.3% +3.9% Q13 1Q14 2Q14 2Q13 1Q14 2Q14 2Q13 1Q14 2Q14 * PPA effect amounted to 10.2 mln/ in 1H13 and to 9.8 mln/ in 1H14 ** Reminder: net one-off costs for leaving incentives booked in 4Q13 at 26 mln/ 14

15 An impressive cost management story strongly committed to efficiency (Amounts net of non-recurring items) TOTAL OPERATING COSTS -19.3% 1H 2014 vs. 1H ,294 1,305 1,316 1,287 1,244 1,228 1,222 1,209 1,216 1,198 ( mln, net of PPA), 1,198 1,137 1,128 1,072 1,070 1,044 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H STAFF COSTS OTHER ADM. EXPENSE ( mln) 1H 2014 vs. 1H 2007 ( mln, net of PPA) 1H 2014 vs. 1H % -15.7% H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H STAFF HEADCOUNTS NUMBER OF DOMESTIC BRANCHES June 2014 vs. April 2007 June 2014 vs. April % -15.1% 21,70021,550 1,970 20,680 20,926 1,929 1,944 1,939 1,955 20,285 20,260 19,699 19,546 19,407 19,306 19,088 1,884 1,892 1,877 1,875 18,485 18,338 18,438 1,801 1,727 1,726 1,725 1,673 Apr June Dec June Dec June Dec June Dec June Dec June Dec June Apr June Dec June Dec June Dec June Dec June Dec June Dec June Note: staff headcounts at the end of the period 15

16 Signs of stabilisation in gross deteriorated loan stocks, decrease in net deteriorated loan stocks. Encouraging evidences also in terms of inflows from performing loans (-38.1% YoY) Gross deteriorated loan stocks ( mln) +8% +7% +0.9% 10,958 11,840 12,674 12,788 Net deteriorated loan stocks ( mln) +7.6% +6.7% -0.6% 8,105 8,725 9,312 9,257 See annex 7 for details Dec '12 June '13 Dec '13 June '14 Dec '12 June '13 Dec '13 June '14 Inflows from performing loans ( mln) Outflows from deteriorated loans ( mln) 1,831 2, % Outflows to performing loans Loans cashed-in Write-offs 1, H12 1H13 1H14 1H12 1H13 1H14 1H12 1H13 1H14 1H12 1H13 1H14 Significant slowdown in deteriorated loans inflows from performing loans (-38.1% 1H14 vs. 1H13) Slight decrease in outflows of deteriorated loans to performing loans (-70 mln/ 1H14 vs. 1H13) more than compensated by good problematic credit recollection (loans cashed-in up by 19 mln/, or +3.9% 1H14 vs. 1H13) and by noteworthy increase in stock write-offs (+132 mln/, or +74.4%), 4%) almost completely NPLs with an impact on their coverage 16

17 6 month annualised cost of credit at 99 bps (vs. 84 bps of 1H13) LLPs directly correlated to Italian GDP trends LOAN LOSS PROVISIONS* YoY change on 6 month basis in... ( mln) 01% 0.1% Annualised cost of credit (bps) Italian GDP UBI LLPs 34.0% -6.8% 158.4% 1.4% 1.2% 03% -2.1% -2.3% -0.3% -18.6% -18.1% 26.9% 14.8% 11.8% 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14 1H08 / 1H07 1H09 / 1H08 1H10 / 1H09 1H11 / 1H10 1H12 / 1H11 1H13 / 1H12 1H14 / 1H13 LLPs breakdown ( mln) 1H13 1H14 Increasing provisions in 1H14 vs. 1H13 are due to: NET ANALYTICAL IMPAIRMENTS* of which writebacks* transfers within the deteriorated loans portfolio to NPLs ( Sofferenze ), involving higher coverage rate. In 1H14 gross NPLs represented nearly 50% of the total gross deteriorated loans vs. approx 47% in 1H13 NET COLLECTIVE IMPAIRMENTS in a prudential stance, higher incidence of write-offs (69 mln/ in 1H14 vs. 42 mln/ in 1H13) * Analytical writebacks net of time reversal: 123 mln/ in 1H14 vs.100 mln/ in 1H13 Source of Italian GDP: Istat. 1H14 vs. 1H13 preliminary estimate 17

18 June 14 vs. Dec 13: coverage of total deteriorated loans up by 109 bps to 27.61% (+134 bps including write-offs to 37.60%) Coverage 30 Jun '13 31 Dec '13 31 Mar '14 30 June '14 Total deteriorated loans 26.31% 26.52% 27.26% 27.61%..including write-offs 36.18% 36.26% 37.23% 37.60% NPLs (sofferenze) 41.78% 41.60% 41.02% 40.61%..including write-offs 56.17% 56.05% 55.80% 55.09% Impaired loans (incagli) 14.07% 15.12% 16.22% 16.23% Coverage impacted by the sale of 61 mln/ of gross NPLs covered at 91%. Excluding this event, the coverage would have risen to 41.1% (55.4% including write-offs) Restructured loans 14.45% 13.94% 14.16% 14.49% Past due loans 3.23% 2.83% 4.95% 4.78% Performing loans 0.56% 0.61% 0.59% 0.57% OTHER KEY ELEMENTS TO ASSESS THE GROUP LOAN PORTFOLIO LOAN TO VALUE* % OF COLLATERALISED POSITION** COVERAGE OF NON-COLLATERALISED POSITIONS (Impaired Loans Stock) NPLs and Impaired Loans Stock) (as at 31 Mar 14 and 30 June 14) 57.0% 57.1% 52.7% 49.7% > 63% > 64% 71.88% 71.65% 25.25% 25.29% Mar '14 June '14 Mar '14 June '14 NPLs (including write-offs) Retail Corporate Mar 14 June 14 Impaired loans * The LTV of performing loans stocks is 45.8% for Retail mortgages and 41.2% for Corporate mortgages. All figures, both for performing and non performing loans, refer to Network Banks + UBI ** Overall over 60% of the total loan portfolio is assisted by collateral-real estate (the secured portion of the portfolio increases to 75.9% adding up personal guarantees). Source: 2013 Annual Report 18

19 Outlook Under current market conditions net interest income should benefit in terms of: interest expense from a progressive decrease in the cost of the marginal, more onerous components and from repricing action already taken, which will become fully effective in the second half interest income from the resilience of medium to long-term loan yields The positive contribution from fee and commission income is expected to continue, assisted by favourable seasonal factors that normally occur in the second half of the year The reduction in administrative expenses is confirmed compared to 2013, while the performance of staff costs will depend on the final outcome of the renewal of the national labour contract The slowdown in the pace of new defaulted loans recorded in the first quarter of the current year continued again in the second quarter and allows expectations of an overall year-on-year improvement compared with 2013 in loan losses to be confirmed 19

20 Latest Group streamlining processes Recent announcements on... P&L impacts Redefinition of strategic partnership in the bancassurance sector Life: sale by UBI Banca of 30% of Ai Aviva Vita S.p.A. and Ai Aviva Assicurazioni Vita S.p.A. and repurchase by UBI Banca of all the stakes held by subsidiaries of Aviva Italia Holding Spa in Banca Popolare Commercio e Industria, Banca Popolare di Ancona and Banca Carime 57 mln of net gain Non Life: sale of UBI Banca s remaining stake in UBI Assicurazioni (50%-1 share) to BNP Paribas Cardif and Ageas 27 mln of net gain Integration between IW Bank and UBI Banca Private Investment 20

21 Annexes 21

22 Reclassified balance sheet: highlights Annex 1 MAIN ASSETS ITEMS Figures in millions of euro % annual change % quarterly change Financial assets (AFS, HFT, FV, HTM) 21,763 21,841 23,238 22, % -4.7% Loans to customers 91,268 88,421 87,095 87, % 0.0% Property, equipment and investment property 1,922 1,798 1,781 1, % -0.9% Intangible assets 2,946 2,919 2,903 2, % -0.2% of which: goodwill 2,537 2,512 2,512 2, % 0.0% Tax assets 2,393 2,833 2,824 2, % -9.1% Other assets 1, , % 51.2% Total assets 127, , , , % -0.6% MAIN LIABILITIES AND EQUITY ITEMS Figures in millions of euro % annual change % quarterly change Net interbank position* 10,250 10,888 11,389 11, % 4.4% Due to customers 52,843 50,702 46,367 47, % 1.6% Securities issued 43,501 41,902 44,478 43, % -3.2% Tax liabilities % -31.7% Net worth attributable to the Parent 9,809 10,089 10,609 10, % -0.1% Non-controlling interests % 0.9% Profit for the period % 82.7% Total liabilities and equity 127, , , , % -0.6% * Including 12 bln LTRO 22

23 Capital Ratios (Phased in, Basel III) as at 30 June 14: Common Equity Tier 1 Ratio at 12.73%, Total Own Funds Ratio (TCR) at 18.03% Annex 2 Figures in millions of euro 31 Mar '14 Basel III 30 June '14 Basel III Common Equity Tier 1 Capital (before filters and transitional provisions) 7,842 7,974 Transitional provisions (minority interest) Transitional provisions (AFS Reserves) Common Equity Tier 1 Capital filters Italian Govies filters Common Equity Tier 1 (after filters and transitional provisions) 8, ,183.5 Common Equity Tier 1 regulatory adjustments of which: negative elements for deduction excess of expected losses over impairment losses Common Equity Tier 1 7, ,664.1 Tier 1 7, ,664.1 Tier 2 capital before transitional provisions 3, ,527.9 Tier 2 instruments grandfathering Tier 2 capital after transitional provisions 3, ,547.2 Tier 2 capital regulatory adjustments of which: negative elements for deduction excess of expected losses over impairment losses Tier 2 capital 3, ,189.3 Total Own Funds 10, ,853.4 Credit risk 4, ,414.9 CVA (Credit Value Adjustment) risk Market risk Operational risk Total prudential requirements 4, ,804.4 Risk weighted assets 61, ,190.4 Common Equity Tier 1 Capital Ratio 12.23% 12.73% Tier I Ratio 12.23% 12.73% Total Own Funds Ratio (TCR) 17.72% 18.03% 23

24 Indirect Funding Evolution Annex 3 INDIRECT FUNDING +6.8% +0.4% In bln June '13 Dec '13 Mar '14 June '14 vs. June 13 vs. March 14 AuM Bancassurance AuC % +2.6% +5.8% +2.0% +8.8% -2.1% June 13 Dec 13 Mar 14 June 14 AuM Source: Assogestioni ss PATRIMONIO GESTITO* aggregate 11% 3% 13% 11% 62% 10% 4% 13% 17% 56% 9% 5% 13% 52% 21% 25% 5% 8% More favourable 13% 49% composition of AuM Bond Balanced Equity Flexible Cash * Customers assets managed to which assets received for management under a mandate from other managers are added and from which assets entrusted under mandate to other managers are subtracted. With reference to UBI Pramerica, as from June 12 Assogestioni includes again in this aggregate the amounts managed by third parties, i.e. approx. 4.8 bln managed by Prudential 24

25 Securities Portfolio Details* Annex 4 Composition of the portfolio BY TYPE OF FINANCIAL INSTRUMENT Government bonds 93.2% 94.4% 4% 94.8% Corporate bonds (mainly bank issues) 4.6% 4.7% 4.3% Hedge funds 0.6% 0.6% 0.6% Funds and shares 1.6% 0.4% 0.3% BY FINANCIAL PROFILE Floating rate** 20.4% 20.0% 49.5% Fixed rate 74.5% 76.1% 46.8% Structured securities 3.0% 2.9% 2.8% Shares, funds, convertible bonds 2.2% 0.9% 0.9% BY CURRENCY Securities in euro 99.7% 99.7% 99.7% BY GEOGRAPHICAL Securites of the euro area 99.6% 99.6% 99.7% DISTRIBUTION USA securities 00% 000% 000% BY RATINGS ( BONDS) Investment grade 99.1% 99.0% 99.1% Average rating Baa2 Baa2 Baa2 * Analysis refers to a portfolio which excludes participations, some smaller portfolios and derivatives ** Fixed rate securities with asset swaps are considered as floating rate securities; securities in asset swap represent 94% of floating rate securities as at 30 th June

26 Net Interest Income Details Annex 5 CUSTOMER SPREADS in bps on avg. STOCK* 2Q13 1Q14 2Q14 1M Euribor Mark up vs 1M Euribor Short term Medium-long term Mark down vs 1M Euribor Sight deposits Term deposits Retail bonds Institutional bonds UBI Group - Customer spread of which Network Banks cust. spread** * Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI), unless otherwise stated ** Network Bank customer spread includes subordinated debt 1Q14 values restated for consistency 26

27 Net Commission Income details Annex 6 Net Commission Income: Half-Year Evolution Net Commission Income ( mln) 1H13 1H14 1H14 / 1H13 (%) Guarantees (on State guaranty bonds) (23.1) (15.7) -31.8% BANKING RELATED COMMISSIONS % of which: Guarantees (banking activity) % Collection and payment services % Services for factoring transactions ti % Current accounts management % Other services % MANAGEMENT, TRADING & ADVISORY SERVICES* % of which: Portfolio management % Placement of securities % Third party services distribution % TOTAL % Net Commission Income: Quarterly Evolution Net Commission Income ( mln) 2Q13 1Q14 2Q14 2Q14 / 2Q13 (%) 2Q14 / 1Q14 (%) Guarantees (on State guaranty bonds) (11.6) (10.1) (5.6) -51.6% -44.5% BANKING RELATED COMMISSIONS % 1.1% 1% of which: Guarantees (banking activity) % -14.9% Collection and payment services % -0.3% Services for factoring transactions % -6.1% Current accounts management % 6.3% Other services % 2.1% MANAGEMENT, TRADING & ADVISORY SERVICES* % 2.1% of which: Portfolio management % 7.6% Placement of securities % -1.3% Third party services distribution % 1.9% TOTAL % 4.1% 32% 3.2% * Includes FX negotiations and excludes performance fees 27

28 Asset Quality details Annex 7 LOANS TO CUSTOMERS - AS AT 30 JUNE 2014 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln NPLs (Sofferenze) 6, % 2,579 IMPAIRED LOANS (Incagli) 4, % 798 RESTRUCTURED LOANS % 121 PAST DUE % 33 CARRYING AMOUNT mln %* COVERAGE RATIO % 3, % 40.61% 4, % 16.23% % 14.49% % 4.78% Coverage impacted by the sale of 61 mln/ of gross NPLs covered at 91%. Excluding this event, the coverage would have risen to: 41.1% 27.9% NPLs coverage pro-forma Total deteriorated coverage pro-forma TOTAL DETERIORATED LOANS 12, % 3,531 9, % 27.61% TOTAL PERFORMING LOANS 78, % , % 0.57% TOTAL LOANS TO CUSTOMERS 91, % 3,980 87, % 4.37% LOANS TO CUSTOMERS - AS AT 31 MARCH 2014 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln CARRYING AMOUNT mln %* COVERAGE RATIO % NPLs (Sofferenze) 6, % 2,468 IMPAIRED LOANS (Incagli) 5, % 824 RESTRUCTURED LOANS % 125 PAST DUE % 34 3, % 41.02% 4, % 16.22% % 14.16% % 4.95% TOTAL DETERIORATED LOANS 12, % 3,450 9, % 27.26% TOTAL PERFORMING LOANS 78, % , % 0.59% TOTAL LOANS TO CUSTOMERS 91, % 3,912 87, % 4.30% * As a percentage of total loans 28