One Bank, One UniCredit Capital Markets Day. London, 12 December 2017

Transcription

1 One Bank, One UniCredit Capital Markets Day London, 12 December 2017

2 Agenda Breakfast & Registration Transform 2019 Q&A session Topic Speaker J.P. Mustier Time Transform Operating Model and Maximize Commercial Bank Value Commercial Banking Italy G.F. Papa A. Casini / G. Ronca Q&A session 1 Coffee Break Improve Asset Quality CFO Presentation Q&A session Closing remarks Lunch T.J. Lim M. Bianchi J.P. Mustier

3 One Bank, One UniCredit Transform 2019 J. P. Mustier London, 12 December 2017

4 Transform 2019: key targets confirmed with an improved risk profile (1/2) A simple successful Pan European Commercial Bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to its extensive client franchise Transform 2019 fully on track yielding tangible results underpinned by group-wide business momentum 2019 key targets confirmed 2

5 Transform 2019: key targets confirmed with an improved risk profile (2/2) 2019 key targets confirmed, RoTE target >9% 2019 fully loaded CET1 ratio confirmed >12.5% FY19 dividend 1 payout increased from 20% to 30% Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed Self-funded full rundown of Non Core by To be paid in

6 One Bank, One UniCredit Transform 2019 fully on track Strong commercial dynamics thanks to network revamp 2019 revenues confirmed: higher relative contribution of fees and commissions 2019 costs confirmed: higher HR savings allowing for additional IT Investments 2019 RoTE target confirmed at >9% Additional NPE rundown FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18 Group gross NPEs down by a further 4.0bn 1 by end 2019, better than initial Transform 2019 target Self-funded full rundown of Non Core by 2025 Confirm capital target whilst increasing dividend payout SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps from fully loaded CET1 ratio target confirmed >12.5% including partial anticipation of regulatory headwinds Post 2019, annual CET1 ratio 2 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds FY19 3 dividend payout increased from 20% to 30% thanks to a solid capital position Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed 4 1. Of which: Non Core down by 2.0bn from 19.2bn to 17.2bn and Group Core down by 2.0bn from 25.1bn to 23.1bn 2. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 3. To be paid in 2020 Note: CET1 ratio fully loaded and data in Euro throughout the document unless otherwise stated

7 2019 key targets confirmed RoTE target >9% and further 4.0bn reduction of NPEs bn, unless otherwise stated 9M17 Revenues 14.8 Cost <-11.7 LLP -1.8 Net Income Line adjustment unchanged unchanged Cost/income 57.9% <52% unchanged Cost of risk 54bps 55bps +6bps 1 Gross NPE stock 51.3 RoTE 8% >9% down by 4.0bn from 44.3bn improved unchanged CET1 ratio 13.8% >12.5% unchanged Net Income and RoTE confirmed FY17 Guidance 5 1. Line adjustment due to accounting changes, for details see Annex slide 19 and 20. Increase of revenues only impacts NII and it is compensated by LLP increase which mechanically impacts cost of risk 2. Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao and Pioneer disposals as at 1 January 2017

8 One Bank, One UniCredit The five pillars ONE BANK ONE 5 STRATEGIC PILLARS STRENGTHEN AND OPTIMISE CAPITAL IMPROVE ASSET QUALITY TRANSFORM OPERATING MODEL MAXIMISE COMMERCIAL BANK VALUE ADOPT LEAN BUT STEERING CENTRE 6

9 Transform operating model Overall revenues target confirmed: higher relative contribution of fees and commissions bn Trading Income, Dividends and Other Revenues 1 mix evolution Fees & Commissions 2019 target confirmed NII Previously: 7.0bn on Fees and Commissions 11.1bn on NII Comments Fees expected to reach 7.1bn as a result of higher AuM Reduction of NII of 0.1bn: U-shaped vs. V-shaped Net interest income evolution between 2017 and 2019 loan volumes revised lower by 11bn to 444bn 2 lower cost of funding thanks to decreased issuance and lower rates Customer rates bottoming out in the second half of Including line adjustment from accounting changes, for details see Annex slide 19 and Net loans excluding repos

10 Transform operating model Cost target confirmed, FTE and branch reductions ahead of schedule Cost savings FTE reduction Branch reduction in Western Europe 1 Group costs, bn Group FTE, '000 Branches in Western Europe target confirmed >59% to be achieved by end ,809 < ,127 72% achieved as of November 17 2, HR savings Non-HR savings Decrease in costs on track with Transform 2019 Higher HR savings allowing for additional IT Investments FTE reductions ahead of Transform 2019 schedule, 51% as of 9M17 7,232 net redundancies as of 9M17 and over 1,300 planned for 4Q17 Additional 121 branch closures in Italy realised in 4Q further closures planned between 2018 and Retail branches 2. Already done as of November 17 Note: Numbers might not add up due to rounding

11 Transform operating model Digital and IT transformation on track Improved customer experience thanks to digital transformation IT achievement Innovative distribution channels New multi-country online and mobile banking platforms New Corporate Portal in Italy, Germany and Austria Reduction of IT complexity Decommissioning applications closures (ca. 75% versus target 2019) Global application to replace local ones End-to-End 1 : simplification and improvement of key processes First bank in Italy to launch payments via Apple Pay and to introduce Alipay 3x faster procedure for current account opening, with increased number of risk controls Increased dematerialisation process Launched fully remote card management on Internet and mobile banking Evolution of Core Banking system Infrastructure transformation Phased-in release of new applications to minimise operational risk November 2017 New Core Banking system first release Ongoing program including rationalisation and simplification Set-up of first proprietary cloud infrastructure 1. End-to-End process launched for Commercial Banking Italy, planned expansion to include Commercial Banking Germany and central functions 9

12 Maximise Commercial Bank Value Western Europe transformation progress resulting in higher productivity Commercial Banking Italy Commercial Banking Germany Commercial Banking Austria +4.0% Fees and Commissions % Fees and Commissions % Fees and Commissions 1-3.2% Operating Costs 1-3.1% Operating Costs % Operating Costs 1 Cost of Risk, bps RoAC 2, % Cost of Risk, bps RoAC 3, % Cost of Risk, bps RoAC 4, % M16 9M17 9M16 9M17-1 9M16 9M17 9M16 9M17-8 9M M17 9M16 9M17 Actions implemented Multichannel approach New service model for Affluent and SME clients Actions implemented New service model for SME client segment Closer CIB-Commercial banking collaboration Actions implemented New Retail service model Focus on cross-selling Delta between 9M16 and 9M17 2. Stated figures, allocated capital calculated as 12.5% of RWA 3. Allocated capital calculated as 12.5% of RWA; normalised RoAC. 9M16 for capital gain on Visa disposal; 9M17 for a capital gain on disposal in 3Q17 and a release of a tax provision in 2Q17 4. Allocated capital calculated as 12.5% of RWA; normalised RoAC. 9M16 for DBO integration costs and others items; 9M17 for real estate disposals and tax effects

13 Maximise Commercial Bank Value CEE and CIB confirming leadership positions CEE CIB +4.4% Fees and Commissions p.p. Client driven revenues 1 +10% Net new clients 2-4.6% Operating costs 1 Cost of Risk, bps RoAC 3, % Cost of Risk, bps RoAC 3, % M16 9M17 9M16 9M17 9M16 9M17 9M16 9M17 Further strengthened leadership position Confirmed market leadership #1 in terms of total assets 4 #2 in Loan and Bonds Delta between 9M16 and 9M17, for CEE at constant FX 2. Delta between 2015 and 9M17 3. Stated figures, Allocated Capital calculated as 12.5% of RWA, CEE at current FX 4. Based on total assets compared to Erste, Intesa Sanpaolo, KBC, OTP, RBI, Société Générale, ranking as of 1H17 5. Combined Loans and Bonds EMEA All borrowers (EUR denominated) as of 9M17

14 Strengthen and optimise capital 2019 CET1 ratio target confirmed whilst anticipating additional regulatory headwinds Fully loaded CET1 ratio evolution to 2019, % % 9M17 4Q Regulation, models and procyclicality IFRS Confirmed expected regulatory impacts of EBA guidelines (anticipation) etc Organic Capital Generation Total CET1 impact, % Fully loaded CET1 ratio, % 13.8 >13.0 4,5 12.2/12.7 >12.5 Dividend payout 20% 20% 30% Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1 st January Partial anticipation impacts include EBA guidelines related effect and other minor adjustments 4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit 5. Pro-forma for IFRS9

15 Strengthen and optimise capital - Post 2019 annual CET1 ratio 1 >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds % of cumulative phase-in Regulatory Headwinds post 2019 CET1 ratio impact (managerial estimates) Estimated CET1 impact, % up to 2027 EBA guidelines (remaining) % 100% Calendar provisioning % 37% 54% 66% 86% 100% FRTB % 65% 100% Basel IV 4 < % 40% 60% 80% 100% Estimated CET1 impact, % -0.2 < Cumulative net CET1 impact +0.3 < > +1.7 including organic capital generation 5, % Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio 1 >12.5% Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 2. Conservative approach based on ECB proposal has been used 3. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 5. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout

16 Improve asset quality Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Group Core NPEs evolution 1 Non Core evolution 1 Gross NPEs, bn PD UTP Bad Loan Net Loans 2, bn Gross NPEs ratio 3, % NPEs Coverage ratio, % M CoR, bps M bn better than previous target of 25.1bn > Gross loans, bn Performing NPE Net loans 2, bn NPEs Coverage ratio, % M M bn better than previous target of 19.2bn > FINO phase 2 signed Self-funded full rundown of Non Core by For 9M16 and 9M17 stated figure 2. Excluding intercompany and repos 3. Calculated as: Gross NPEs / Gross Loans including intercompany and repos 4. Includes line adjustment, previously 45bps 5. Closing expected in 1Q18

17 Adopt lean but steering Centre Strengthened corporate governance Empowerment of Board of Directors to present its own list of candidates Reduction of board members from 17 to 15 1 of which two appointed from the minority list Removal of 5 per cent limit of voting rights 2 Conversion of saving shares into ordinary shares Delisting from trading of ordinary shares on Warsaw Stock Exchange 3 Corporate governance in line with best in class European companies with simplified share capital structure On December 2016 Board of Directors approved to disclose a recommendation for Shareholders to consider the reduction of Board members for next Board renewal in Subject to condition ("stop loss clause"): in case the exercised withdrawal rights exceeds 0.25% of the Bank's share capital (equal to approximately Euro 98m) Bylaws will not be amended, unless Board of Directors waives such condition 3. Ongoing

18 2019 key targets confirmed 16 Revenues, bn Cost, bn RoTE, % CET1 ratio, % Gross NPE, bn Gross NPE ratio, % M <-11.7 Net Income, bn FY19 dividend 3 payout increased from 20% to 30%, post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio >12.5% Cost/Income, % <52 1 Cost of Risk, bps Net NPE, bn Including line adjustment due to accounting changes, for details see Annex slide 19 and Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao & Pioneer disposals as at 1 January To be paid in 2020 >9 > FY17 guidance down by 4.0bn from 44.3bn down by 0.6 from 8.4 down by 2.5 from 20.2

19 Conclusion Transform 2019 fully on track underpinned by group-wide business momentum 2019 key targets confirmed: RoTE >9%, fully loaded CET1 ratio confirmed >12.5% and improved risk profile FY19 dividend 1 payout increased from 20% to 30% Self-funded full rundown of Non Core by 2025 Post 2019, organic capital generation fully absorbs expected regulatory headwinds To be paid in 2020

20 Q&A session

21 One Bank, One UniCredit Transform 2019 Transform Operating Model and Maximise Commercial Bank Value G.F. Papa London, 12 December 2017

22 One Bank, One UniCredit The five pillars ONE BANK ONE 5 STRATEGIC PILLARS STRENGTHEN AND OPTIMISE CAPITAL IMPROVE ASSET QUALITY TRANSFORM OPERATING MODEL MAXIMISE COMMERCIAL BANK VALUE ADOPT LEAN BUT STEERING CENTRE 2

23 One Bank, One UniCredit A simple successful Pan European Commercial Bank with a fully plugged-in CIB Transform 2019 fully on track yielding tangible results underpinned by group-wide business momentum "One Bank, One UniCredit" approach to maximise synergies Strong commercial dynamics thanks to network revamp Pragmatic approach to digital to support Transform 2019 Positioning UniCredit as a Pan European winner 3

24 One Bank, One UniCredit Snapshot of our successful business Data updated as of 9M17 Commercial bank 1 % of total revenues 9M17 EU based 2 % of total revenues 9M17 Focused 81% 61% 94% 66% UniCredit Peer Av. 3 UniCredit Peer Av. 3 Pan-European but local Countries with banking operations 14 o/w 12 in EU 4 Market position 5 ITA #2 GER #3 AUT #1 CEE #1 6 Distinctive factories Scale GTB powerhouse Syndicated Lending in core countries Lending CMIB 7 Client driven CIB revenues 11 Best Bank in Cash Management ITA #1 GER #1 All Syndicated #1 Trade Finance Provider in #2 Loans and Bonds AUT #1 CEE#2 Loans 10 74% 9 Western Europe and CEE 8 2 nd Corporate lender in EU million clients 4, Retail branches 4 1. CBK Italy, CBK Germany, CBK Austria, CEE as percentage of Group Revenues; 9M17 2. UniCredit excludes Turkey and Russia with a pro-quota approach; BNP Paribas data at FY16 and Société Générale data calculated as of proxy of loans at geographical level; 9M17 3. Peers include: BNP Paribas, Intesa Sanpaolo, Santander and BBVA (only for geographical breakdown), Société Générale 4. Italy, Germany, Austria, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Bosnia and Herz., Serbia, Russia, Romania, Bulgaria, Turkey Source: Dealogic, Euromoney 2017, Global Finance, OeNB 5. Based on Total Assets 9M17. For Austria domestic assets as of end of 2015 on local GAAP (source OeNB). For Germany considering private banks 6. Based on total assets. Compared to Erste, Intesa Sanpaolo, KBC, OTP, RBI, Société Générale, ranking as of 1H17 7. Capital Markets and Investment Banking, 9M17 8. Euromoney Cash management Survey, 2017 and Euromoney Cash Management Survey All Syndicated Loans, Home Countries League Tables (all curr.) 9M Combined Loans and Bonds EMEA All borrowers (EUR denominated) 9M CIB revenues excluding Treasury 9M Peers include: BNP Paribas, Intesa Sanpaolo, Santander, Société Générale, Deutsche Bank 13. Including 100% clients and branches in Turkey; 9M17, excluding Fineco

25 Business momentum and dynamic commercial performance Net Interest Income 1 Loans 2 Fees and Commissions bn Loans volume, Group, bn GCC & Non Core bn % Business Divisions % M16 9M M16 9M M16 9M NII commercial dynamics supported by lower cost of funding Compression of customer spread mainly due to persistently low interest rates Loan volumes of Business Divisions increased by 8.5bn in last twelve months Continuous improvement of the portfolio quality Investment fees up 12.4% 9M16/9M17 thanks to higher AuM and TFAs Increased transactional fees (+7.4% 9M16/9M17) supported by strong GTB performance 5 1. Including line adjustments due to accounting changes (see Annex, slides for additional details). Stated NII: 10.9bn in 2015, 7.9bn in 9M16, 7.7bn in 9M17 2. Excluding Repos; including line adjustments due to accounting changes (see Annex, slides for additional details). Stated Loans: 418bn in 2015, 426bn in 9M16, 421bn in 9M17

26 Commercial Banking Italy Transformation of operating model fully on track Business achievements Efficiency improvement Improved customer focus with a lower cost structure New segmentation of Corporate clients New service models for Affluent and Small Business New branch formats being rolled-out End-to-End product processes redesign Focus on multichannel client approach Cost/Income 1 (%) FTE ('000) Branches , , , ,400 Increasing risk adjusted profitability Strong focus on AuM sales Increasing Consumer Finance Strict risk discipline RoAC 1 (%) M M Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment; Allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA See Annex, slides for additional details

27 Commercial Banking Germany Good results supported by strong growth in all segments Improved customer focus with a lower cost structure Business achievements New SME service model Enhanced Retail focus Increased CIB- Commercial Banking cooperation and crossselling revenues New Bankassurance partnership with Allianz Cost/Income 1 (%) FTE ('000) Efficiency improvement Increasing risk adjusted profitability Growing Trade Finance business Successful conversion of Deposits towards AuM Continuous growth in Retail lending Low CoR given high quality of portfolio Branches RoAC 1 (%) M M Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment See Annex, slides for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Normalised RoAC for Visa sale (10m) 3. Normalised RoAC for a net capital gain on disposal in 3Q17 and in 2Q17 related to the release of a tax provision (for a total of 207m)

28 Commercial Banking Austria Organisation streamlined, renewed focus on premium advisory Improved customer focus with a lower cost structure Business achievements Growing volumes in household lending Improved client satisfaction from new Retail service model Progress in digital transformation Cost/Income 1 (%) FTE ('000) Efficiency improvement Increasing risk adjusted profitability Increasing new loans production maintaining portfolio asset quality Stronger focus on cross-selling Retail AuM growth driving fees increase Branches RoAC 1 (%) M16 9M Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment See Annex, slides for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Normalised RoAC for Visa sale (+34m) and Integration costs (-208m) 3. Normalised for non recurring items in 3Q17: real estate disposals (+65m) and tax effects (+17m) for a total of +82m

29 Tangible results in CEE thanks to transformation actions Key achievements KPIs 1 Organic growth Stable revenue generation in 9M17 2, in line with Transform 2019 targets: - NII stable 9M16/9M17, sustained by lower cost of funding - Fees +7% 3 9M16/9M17, mainly thanks to transaction banking Continued client acquisition (i.e. +10% new clients 9M17 vs 2015) 4.1 Revenues ( bn) Cost savings Focus on cost discipline, confirming a low C/I ratio 37.0 Cost/Income (%) Risk discipline NPEs reduction ahead of target, with NPE ratio down 9M16/9M17 by 140 bps 11.7 Gross NPEs ratio 4 (%) Sustainable profitability RoAC up by 90 bps 9M16/9M RoAC (%) Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment See Annex, slides for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Current FX rates at +0.1% y/y and +3.8% y/y normalized for Visa sale; constant FX rate at -1.3% and +2.4% normalized for Visa sale At current FX rates; constant FX rate: +4.4% 9M16/9M17 4. Excluding Turkey, Ukraine bps normalized for Visa sale 9M16 9M

30 Further strengthened leadership position in CEE Innovation and digitalisation Key achievements Solid growth in digital, in particular mobile +15p.p. vs Agile methodology in key projects Further progress in data management and analytics: new online tools successfully implemented KPIs Digital users 1 (%) o/w Mobile users 1 (%) Synergies with the Group Enhanced international client coverage Effective best practice sharing throughout CEE and Group International clients ('000) Footprint evolution Ongoing network optimisation delivering good results 1. Including Turkey at 100%. Ratio defined as number of Retail digital/mobile users on active retail customers 2. Calculated as number of closures/relocations of branches on total number of branches vs Branch closures/relocations 2 (%) M

31 Confirmed CIB market leadership Confirmed market leadership Solid commercial performance Key achievements Leading EMEA European Debt Finance House Consistently "Top 3" book-runner in Loans and Bonds in core markets Client driven revenues boosted by strong commercial activity CIB-Commercial Banking cross-selling driven by effective initiatives in cross-division and cross-border business KPIs League Tables Combined Loans and Bonds EMEA 1 #2 #2 #3 #2 #3 # Client Driven Revenues (%) 9M M16 9M Continuous cost discipline and simplification Ongoing streamlining of businesses and operating platform resulting in reduced costs Continuous cost discipline to reach 2019 C/I target Cost Income Ratio 2 (%) M16 9M All borrowers (EUR denominated) 2. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment See Annex, slides for additional details

32 GTB, a strong backbone of the Group as well as a technology innovator GTB Powerhouse Strategic Pan-European presence in 14 European core markets International network spanning a further 16 countries worldwide Access to a network of 4,000 correspondent banks, covering ~175 countries Client offer Proven set of core competencies in a wide range of products: - Cash Management & E-Banking - Trade Services - Working Capital Management - Cash & Clearing Products for FIs - Global Security Services 1 Technology innovator Digital innovations covering the whole value chain: - Client access - Product Offering - Back-end processes - Data analytics GTB strong contributor to Group results 1.7bn GTB revenues 2 in 9M17, representing about 11% of Group total Revenues 2017 Awards 12 Best Trade Finance Provider in Western Europe and CEE 1. In Austria and CEE 2. In Western Europe Commercial banking, CEE Division and CIB Division Best Bank in Cash Management in 11 countries Five-Star Cash Manager in Western Europe and CEE

33 Maximise synergies across the Group Key achievements CIB Commercial Banking cooperation Stronger managerial commitment Dedicated cross-selling committees to drive business and identify opportunities International client support Corporate HNWI/ Private/ Retail synergies Improved focus on CIB and International Corporate clients cross-border business Dedicated initiatives in Italy, Germany, Austria and CEE to maximise synergies Optimised Product and Investment Platform Group-wide best practice sharing process in place 13

34 Video: interview with Delivery Hero 14

35 Key indicators proving tangible progress of transformation RoAC 1 (%) KPIs 1 9M16 9M Western Europe Commercial Banking M M Revenues 8.9bn 8.8bn 11.6bn Cost/Income 65.3% 63.1% 57.2% CoR 37 bps 34 bps 37 bps CEE M16 9M Revenues 3.2bn 3.2bn 4.4bn Cost/Income 35.2% 35.8% 36.9% CoR 115 bps 97 bps 102 bps CIB M M Revenues 3.3bn 3.1bn 3.9bn Cost/Income 39.6% 40.2% 40.2% CoR 24 bps 18 bps 21 bps Group RoTE target is confirmed >9% 1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment See Annex, slides for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Italy, Germany and Austria, RoAC normalised for Germany and Austria as per slides 7 and 8

36 Productivity increase, while significantly reducing costs, branches and FTE 12.2 Cost savings FTE reduction Branch reduction in Western Europe 1 Group costs, bn Group FTE, '000 >59% to be achieved Branches in Western Europe by end ,809 3, ,252 72% achieved as of November 2, M16 9M M16 9M M16 9M Decrease in costs on track with Transform 2019 Sound 9M16/9M17 cost reduction of both HR (i.e. -4.7%) and Non-HR costs (i.e. -2.5%) FTE reductions ahead of Transform 2019 schedule 2017 target already achieved, as of 9M17 reached about 51% of 2019 target 2 Execution of branch-closures in line with plan targets 557 branch closures by 9M17 2, representing 59% of 2019 target of closures IT simplification, end-to-end process redesign and new digital solutions as key enablers of productivity increase Retail branches, Italy, Germany and Austria 2. vs 2015 baseline Note: Numbers might not add due to rounding reason

37 Transform 2019 progress monitoring mechanism Actions Transform 2019 progress monitoring mechanism Structured monitoring of initiatives Dedicated Transformation Office Meetings Transformation Jour Fixe Objectives Consolidated view Overall coordination Decision making Participants CEO and GM Pillar Sponsors Program Owners Frequency Monthly Group-wide managerial KPIs Periodical performance review with CEO and GM Pillar Steering Committees Steer transformation Problem solving Pillar Sponsors Program Owners CEO and GM permanently invited Weekly/ Monthly 1 1. Depending on Pillar and Programs 17

38 Improved risk profile thanks to a strong risk discipline Underwriting Disciplined and sustainable new origination, supported by centralization and automation of credit processes Expected Loss on New Business KPI to ensure sound origination Expected Loss on New Business % 9M2017 Expected Loss on Performing Stock % % Monitoring Business as first line of defense for tight portfolio monitoring Advanced automated early warning signals Expected Loss on Performing Stock KPI to observe risk dynamics 9M16 9M17 Gross NPEs ratio 1 5.8% 5.0% 4.7% Perimeter: Group Core 2. Pro-forma including models recalibration occurred end of M16 9M

39 Digital initiatives to support Transform 2019 implementation Areas of Digital development Digital & multichannel experience Advisory services Processes optimisation Risk Management New multi-country online and mobile banking platforms Retail payments innovation Digital sales enablement and transaction migration Pre-scored credit lines Focus on cyber-security Ongoing initiatives New advanced digital and analytical tools in support of Advisors Increasing use of advanced data analytics End-to-End processes redesign and digitalisation 19

40 Structural change of cost base driven by evolving customers behaviour and increasing digitalisation COO Services 1 - Cost mix (%) -14% Cost base evolution Delta (%) Different cost mix, with increasing reliance on IT 43% 49% 29% 26% 28% 26% ICT Real Estate Operations -2% -24% -22% Simplification of IT infrastructure and evolution towards next generation IT architecture Optimisation of Real Estate Process automation and digitalisation, reducing labour-intense Back-Office activities COO Services P&L included in Group Corporate Center perimeter. TCO: Total cost of ownership by Service lines: IT, RE and OPs (Back office, Procurement, Workout, Governance, Security) including related HR and NHR costs

41 IT simplification, back-office streamlining and real estate optimisation key enablers of productivity increase Evolution of IT architecture Ongoing initiatives Reduction of IT complexity by decommissioning applications Modernization of Core Banking system Simplification and improvement of IT infrastructure 830 KPIs Decommissioning of applications (vs 2016) 9M17 >1, Operations efficiency Back-Office capacity enhancement Processes digitalisation and streamlining with E2E approach New organisational design and simplification of geographical presence Back-Office FTE -29% Western Europe branches 1 Real estate optimisation Reduction of Western Europe branches 1 Optimisation of head-quarter spaces 3, ,629 9M16 3,252 9M17 2, Retail branches, Italy, Germany and Austria 21

42 Our Human Capital as fundamental enabler of Transform 2019 Nurture our talents Evolve the way of working Full engagement and commitment to Transform 2019 Create opportunities 22

43 One Bank, One UniCredit A simple successful Pan European Commercial Bank with a fully plugged-in CIB Transform 2019 fully on track yielding tangible results underpinned by group-wide business momentum "One Bank, One UniCredit" approach to maximise synergies Strong commercial dynamics thanks to network revamp Pragmatic approach to digital to support Transform 2019 Positioning UniCredit as a Pan European winner 23

44 One Bank, One UniCredit Transform 2019 Commercial Banking Italy A. Casini G. Ronca London, 12 December 2017

45 Transformation of operating model fully on track Strong commercial dynamics thanks to network revamp Focus on multichannel client approach, leveraging on all interaction points Improved customer focus with a lower cost structure Strict risk discipline on new loan origination and tight risk monitoring Transform 2019 fully on track, yielding tangible results 2

46 Economic landscape Italy open for business +1.6% 2017 Real GDP expected growth 1 Domestic credit to private sector 3 (% of GDP) ~86% #2 Manufacturing economy in Europe 2 Household saving rate 5 ~10% ~30% Export of goods and services (% of GDP) 3 % increase of online transaction 6 +17% ~5.7m Enterprises in Italy 4 Internet users penetration 7 62% 3 1. UCG Assumptions 2. World Bank - Manufacturing GDP per capita 3. World Bank 4. Ce.Bi 5. ISTAT 6. MIP/Osservatori.Net 7. Audiweb powered by Nielsen

47 Key business priorities and achievements Retail commercial performance mainly driven by productivity increase Strengthen asset gathering Reaffirm leading position in Retail lending Productivity 4 Expanded product offer also thanks to the partnership Pioneer-Amundi 1 Growth in AUM and its share of TFA Robust new production of Consumer Finance, improving the quality of origination 2017 key highlights Increased share of wallet in Small Business 4 Improving market share in residential mortgages new business 6 from 8.7% in Dec16 to 11.7% in Sep17 Strong increase in FTE productivity, accelerating in 2017 Productivity gains driven both by optimised salesforce and increase in total banking sales 1. Including new products 2. Includes Retail, Corporate, Private, Wealth Management, CC local, Leasing and Factoring 3. Recasted data 4. Leveraging on pre-approved loans, new acquisition initiatives (jointly launched by Risk and Business divisions) and dedicated IT tools (e.g. CRM tool for Small Business) 5. Consumer Finance and Small Business. CAGR relates to stock. AuM 2, bn AuM/ TFA Retail loan stock, bn CF&SB 5 Sales per FTE 7, Index Evolution M2016 9M % 34% 36% 41% Net Sales 9M2017: 8.1 bn M2016 CAGR: +2.5% M2017 CAGR 15-19: +5.8% Source: ABI 7. Ratio between number of Banking sales and FTE dedicated to sales activities. Banking sales are: current accounts, "Genius" cards, pre-paid cards, credit cards (Flexia), credit cards (Flexia) instalments and switch, overdrafts, personal loans, mortgages, "fast credit", enterprises loans, salary loans, saving & term deposit, AUM, insurance, P&C insurance, CPI, car insurance (new emissions and renewals), debit cards, POS, App Mobile and Online Banking 8. Figures relates to annualised data for 9M

48 Key business priorities and achievements The new Corporate model delivering tangible results 2017 key highlights Evolution Become go-to bank for customers Sustained new origination with consolidated risk discipline MLT new loans 1, bn M M CIB "fully plugged-in" (e.g., F&A, Joint Venture) and Boost Cross-selling synergies between Retail, Private and Wealth Management Focus on cross-border business - new international accounts increased by 11% Y/Y 2 Coordinated commercial activities - increased pitch Revenues from F&A and JV 3, m intensity, joint targeting, joint business meetings M2016 9M Transform operating model Network specialisation (Corporate and Retail) coupled with organisation delayering (minus 1 layer) New clients segmentation in place 1. Corporate loans excluding leasing 2. As of November Includes revenues from structured financing, Markets, DCM, ECM, M&A

49 Key business priorities and achievements Transformation of operating model fully on track 2017 key highlights Evolution FTEs Reduction of FTEs ongoing: - Ca. 2,700 net exits in (o/w ca. 1,000 in 4Q17) - Ca. 4,000 net exits since (more than 50% of 2019 target) - FTE re-training program, moving staff from back office to front office roles and new junior hirings Evolution of FTEs, #, ' M M Sales channels Rationalisation 2017 completed: branch closures in 2017 (o/w 121 in 4Q17 3 ) - Ca. 620 branch closures since 2015 (70% of 2019 target) Retail Branch network, # 3, ,140 9M2016 2,784 9M2017 2, Day-to-day Banking Migration program 2017 on track: - Revised branch formats to increase automated transactions 4 on basic services - Reduction of in-branch transactions on track (-15% 9M/9M) Automated transactions 4, % of total 88.0% 89.7% M % 9M % Exits are fully provisioned 2. Including approximately 1,000 exits in 4Q17 3. Already completed by the end of November Includes cash withdrawals, cash deposits and transfers

50 Multichannel strategy Innovative redesign of branches Branch formats FULL SERVICE Branch SMART Branch CASH-LESS Branch Description Branches with 360 service: All products and specialised advisory services Transactions provided both by teller and advanced ATMs (Casse Veloci) Partially automated branches: All products and simplified advisory services Transactions provided by advanced ATMs (Casse Veloci), no teller available Fully automated branches: Basic products and remote advisory services Transactions provided by ATMs, no teller available 2019 target # branches 1, Business Centre New centres fully dedicated to Small Business customers All products and services available Dedicated coverage for specific sector/ customer segments 7

51 Multichannel strategy Foster digital adoption Solid increase of internet & mobile users New Internet Banking, GIMB New Wallet solution for mobile payments 3M 1.6M online banking user mobile banking user +6% 2 +18% 2 New digital processes Digital signature SMS/token signature 38% digitalised contracts (7,5 million contracts 3 ) since launch in 2015 Move to digital transactions Supported by branch automation Growing number of digitally enabled transactions 900 2x # of currently installed "Casse Veloci" 4 faster migration speed for branches with "Cassa Veloce" Continuous improvement of seamless multichannel customer approach 8 1. Data as of September 30 th Increase 9M2016 9M Equal to 130 million of pages 4. Data as of November 15 th 2017

52 Multichannel strategy Reinforcing leadership in remote sales Number of remote sales +40% Remote sales increase 9M/9M Index, 2015 = 100 Strong growth of remote sales +34% Pre-approved lending solutions 9M/9M % Property & Casualty bancassurance products 9M/9M Weight on total sales M2016 9M2017 9% 17% 19% More products available on digital platform NEW NEW NEW Pre-approved lending solutions on "credit revolution 1 " platform (5 product categories) for Retail customers Robo for Advisory process (leveraging on internal best practices) SME loans offering, leveraging on credit revolution 1 approach (pre-approved credit) 9 1. Credit Revolution is a Program within Risk division mainly aiming at: a) simplifying credit process and products and b) rationalizing IT architecture and platforms.

53 Video on Multichannel strategy 10

54 End-to-End Delivery Unit to optimise internal processes and enhance customer satisfaction E2E Delivery unit Guiding principles Expected benefits/goals Teams organised in "rooms", each focusing on a different product/ process Cross-functional teams including Business, IT and other relevant Departments 1 Idea generation workshops to merge business priorities and customer feedback Agile methodology No-frills approach Fast delivery Open mindset >450 FTEs 3x 100% Increased efficiency More than 450 FTE efficiencies in 2017 Speed to open a current account 3 times faster (thus improving satisfaction of customers) Self Service for Credit Card Full remote card management on Internet and Mobile Banking 24/7 Sustainability of solutions with specific focus on risk Increased number of automated risk controls for current account opening from 0 to 7 1. E.g. Risk, Legal, Compliance, Processes, HR 11

55 SMEs as the backbone of the Italian ecosystem Italian non-financial enterprises Key client drivers 5.7 million enterprises 1 0.1% 2% 0.5% 100% Internationalisation and access to foreign markets 97% 46% Size 3 Large Medium Small Digital innovation and technology investments Generational handover, "managerialisation", industry knowledge and networking 22% Micro Access to Capital Markets: Equity/ Debt for growth acceleration 19% Companies 12% GDP 2 Strong cross-selling potential within improving Italian economic scenario Includes individual enterprises and VAT numbers 2. Based on value added distribution 3. Based on the European Commission categorization, accounting for a combination of employee number, turnover and total assets respectively: <10 and 2m or 2m for Micro, <50 and 10m or 10m for Small, <250 and 50m or 43m for Medium, 250 or >50m and >43m for Large Source: Ce.Bi. 2017, 2015 data, UniCredit analysis

56 Video: Rainbow an Italian growth story 13

57 New segments in place to enhance commercial targeting New segments in place Dedicated service models Industry verticals Large ~ 1k Groups > 350m turnover 1 CIB platform fully plugged-in with competitive service model Cost/ Income Real Estate Top ~ 8k Groups > 25m turnover 2 Commercial targeting based on key client needs Modular approach by industry, size and specific demands ~ 400 groups Mid ~ 16k Groups > 5m turnover 3 Simplified solutions to match basic client needs Digital platforms and best practice sharing with Small Business Public Sector ~ 3k groups Small Business 4 ~ 660k Clients < 5m turnover Dedicated Business Centers Remote advisory for basic banking needs Or local subsidiary of international clients 2. Or clients with complex needs based on actual and potential revenues, number of products, cross-border propensity and risk/return profile 3. Or clients with basic needs; 4. Small Business consolidated in Retail segment

58 enabled by a new digital infrastructure The data ecosystem Digital workbench with advanced data analytics Commercial targeting for lead generation Integrated access to product platforms Mobile sales productivity and enhanced advisory Cross-border capabilities Online banking platforms by segment Online portal for Large corporates with specialised tools for complex products Simple online "environment" for SMEs with value-added/ non-banking services Digitalised operations Industrialised operations through automation, digital tools and analytics Multichannel experience Digital document exchange Multiple signature collection with mobile digital signature Real time access to massive amount of internally available data, across all segments Innovate through CIB & Retail Banking digital platforms evolution Integrate advanced analytics into every function and process, across all segments 15

59 Disciplined risk approach to underwriting and monitoring Actions Evolution Network focused on investment grade classes Increased number of preapproved customers eligible for lending Improved screening of watch list portfolio and evolution of risk alerting systems for Network Default rate 1, % M2016 9M Due to seasonal effects, we expect Gross NPEs to slightly increase in CBK Italy in 4Q 2017 We confirm 2019 NPE targets Gross NPE ratio, % M2016 9M CBK Italy, including Leasing and Factoring 2. Recalculated on the bases of forecasted volumes

60 Transformation of operating model fully on track Strong commercial dynamics thanks to network revamp Focus on multichannel client approach, leveraging on all interaction points Improved customer focus with a lower cost structure Strict risk discipline on new loan origination and tight risk monitoring Transform 2019 fully on track, yielding tangible results 17

61 Q&A session

62 One Bank, One UniCredit Transform 2019 Improve Group Asset Quality T.J. Lim London, 12 December 2017

63 One Bank, One UniCredit The five pillars ONE BANK ONE 5 STRATEGIC PILLARS STRENGTHEN AND OPTIMISE CAPITAL IMPROVE ASSET QUALITY TRANSFORM OPERATING MODEL MAXIMISE COMMERCIAL BANK VALUE ADOPT LEAN BUT STEERING CENTRE 2

64 Decisive actions to improve Group asset quality Improved asset quality in 2017 thanks to proactive actions on stock and disciplined origination 9M17 Group CoR at 54bps, 23bps lower than in 9M16 thanks to strict risk management and write-backs FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18 Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Self-funded full rundown of Non Core by Note: Throughout the document numbers might not add due to rounding reasons, 9M16 figures restated assuming new Group perimeter, for 9M17 figures are stated

65 Proactively providing transparency and clarity on regulatory headwinds Assumptions on regulation, models and procyclicality up to end 2019 confirmed Solid capital position allows for a partial anticipation of EBA guidelines during Transform 2019 Post 2019, organic capital generation fully absorbs expected regulatory headwinds Transparency on expected impacts of regulatory headwinds, both on risk models and KPIs Confirmed 2019 Group CoR target of 55bps 1 even with additional impact of regulation and model changes 4 1. Previously 49bps; delta for line adjustments from accounting changes (see annex slide 35)

66 2017 asset quality improved thanks to proactive actions on stock and disciplined origination Asset quality evolution Comments Asset quality Gross NPEs ratio, % 4.5p.p. 15.2% 0.8p.p. 10.6% 9M16 5.8% 5.0% 9M17 Group Group Core 9M16 9M17 9M16 9M17 Cost of Risk, bps Net NPEs, bn Group NPEs ratio improved significantly by dropping 4.5 p.p. to 10.6% Group Core NPEs ratio at 5.0% close to EBA average of 4.5% 1 Strong NPEs coverage, increasing year on year for Group by 4.3p.p. to 56.5% and for Group Core by 6.1p.p. to 55.7% NPEs coverage, % UTP coverage, % Bad Loans coverage, % EBA Risk Dashboard - data as of 1H17 (including EU banks) 5

67 Significant improvement across all Group asset quality metrics bn Net flows YTD Inflow to NPEs YTD Outflow to Performing YTD Group Core dynamics M16-30% M17 Default rate 1,% Migration rate 2, % Group Core Comments Significantly lower net flows to NPEs (-30%) Default rate decreased to 1.3%, reflecting strong underwriting and monitoring discipline Thanks to effective restructuring management Migration rate to Bad Loans decreased to 15.4% and Cure rate improved to 9.2% Cure rate 3, % Default rate: Inflow to NPEs on Performing stock of previous year 2. Migration rate: Inflow from UTP to Bad Loans on UTP stock of previous year 3. Cure rate: Outflow to Performing on NPEs stock of previous year

68 Expected Loss evolution confirming strong underwriting discipline Expected loss - Group Core Group Core % M16 Stock 9M17 Stock 9M17 new business Commercial Banking Italy Commercial Banking Germany Commercial Banking Austria CEE CIB % M16 Stock 9M17 Stock 9M17 new business 9M16 Stock 9M17 Stock 9M17 new business 9M16 Stock 9M17 Stock 9M17 new business 9M16 Stock 9M17 Stock 9M17 new business 9M16 Stock 9M17 Stock 9M17 new business Expected Loss on performing stock improved by 3bps to 0.35%, Expected Loss on new business at low levels in all divisions 1. Pro-forma including models recalibration occurred end of

69 Low Group Core Cost of Risk thanks to disciplined risk management and write-backs Group Core Cost of Risk - Group Core bps M16 9M17 Commercial Banking Italy Commercial Banking Germany Commercial Banking Austria CEE CIB bps M16 9M17-1 9M16 9M17-8 9M M17 9M16 9M17 9M16 9M17 Note: figures do not include line adjustments from accounting changes 8

70 NPEs deleveraging plan on track thanks to decisive actions in Non Core Non Core Non Core evolution Actions of Non Core run down Gross Loans, bn Gross loans, bn Performing NPE FINO "Back" to Core Repayments Disposal of bad loans Mostly corporate Mainly driven by corporate, small business, real estate and mortgages M16 Net Loans 1, bn NPEs coverage, % M Disposals Recoveries Focus on retail unsecured portfolio, leasing and corporate (single name) In line with expectations UTP coverage, % Write-offs Active portfolio management and cost optimisation -1.3 Bad loans cov., % Total Excluding intercompany and repos bn as of June 2016 and 17.0bn as of December 2016, thanks to recovery activities. Starting from 31 December 2016 the credit exposures belonging to the FINO portfolio were recognized in item Non-current assets and disposal groups classified as held for sale" 3. O/w 1bn in 4Q16

71 FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20% Non Core FINO Phase 1 FINO Phase 2 Decisive Further reduce the risk profile of the Bank Objectives Timeframe Objectives Optimise capital structure of FINO Impactful (17.7bn 1 ) Achievements Framework Agreements signed in December 2016 and executed in July Pricing confirmed. No additional provisions Execution Strategy Phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18 Rating on FINO received and application for GACS 3 in progress Significant Risk Transfer application in progress bn as of June 2016 and 17.0bn as of December 2016, thanks to recovery activities. Starting from 31 December 2016 the credit exposures belonging to the FINO portfolio were recognized in item Non-current assets and disposal groups classified as held for sale" 2. As per information published in the rights issue prospectus in January 2017, the average price of the transfer of the portfolios sold as part of the FINO transaction was approximately 13 per cent of the gross book value (17.7bn, calculated as at 30 June 2016) 3. GAranzia sulle Cartolarizzazioni delle Sofferenze

72 Transparency on sector-wide regulatory headwinds 1 up to end 2019 and beyond Regulatory headwinds During Transform 2019 Regulation, models and procyclicality IFRS9 EBA guidelines (anticipation) Model changes, recalibrations and other impacts from regulation First time adoption of Fair Value accounting and new provisioning rules Definition of common standards for credit risk regulatory models partial anticipation mainly on Italian models Assumptions on regulation, models and procyclicality up to end 2019 confirmed Solid capital position allows for a partial anticipation of EBA guidelines during Transform 2019 EBA guidelines (remaining) Definition of common standards for credit risk regulatory models Beyond Transform 2019 Calendar provisioning FRTB Inflow to NPEs to be fully provisioned 2 years (unsecured) and 7/8 years (secured) after default Revision of capital framework for market risks Post 2019, organic capital generation fully absorbs expected regulatory headwinds Basel IV Credit and operational risk requirements, introducing constraints to use internal models for capital No impacts have been considered in terms of prudential measures on Sovereign exposure, considering that as of now no changes to current rules have been introduced while a discussion paper was published by Basel Committee on 7 December Given the duration and composition of Sovereign portfolio proactive actions to manage potential capital impacts would be taken

73 EBA guidelines defining European standards for credit risk regulatory models Regulatory headwinds Status Requirements Description of requirements Relative weight 3 Final document issued on 20 November 2017 Requested implementation starting in 4Q20 and to be completed in 2021 Sector-wide regulation; mostly impacting banks with high NPEs ratios and countries with long judicial procedures LGD 1 discount rate on recoveries LGD incomplete workout 2 treatment Margin of conservatism Other requirements More conservative discounting of recoveries (historical risk free rate + fixed spread of 5%) Realised and projected losses of all defaults to be included in LGD computation Introduction of prudential factors to compensate estimation errors Others including: - higher weight of stressed macro-economic scenarios - revised treatment of temporary cured cases - framework for the treatment of extraordinary disposals (technical guidance expected) LGD (Loss Given Default) model estimates future losses based on historically realised losses 2. Incomplete workout includes defaulted positions on which collection activities are still ongoing 3. Relative weight on total expected impact based on preliminary assessment High weight Low weight

74 Basel IV introducing constraints for use of internal models for capital Regulatory headwinds Status Requirements Description of requirements Relative weight 5 Final document issued on 7 December 2017 Requested implementation date on 1 January 2022 Assumed 5-years phase-in period 1 Credit Risk (Standardised 2 and IRB 3 ) Operational Risk No Advanced IRB 3 treatment for Banks and Large Corporate (no LGD model) Overall review of risk weights of the Standardised 2 approach Capital absorption for all off-balance exposures Conservative floors on PD and LGD parameters No internal model allowed Overall review of Standardised approach Output floor 4 Set at 72.5% High weight Low weight Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 2. Standardised approach: Regulatory defined risk weights applied by asset class according to the type of exposure/collateral 3. IRB: Internal Rating Based approach 4. Output floor: minimum capital level calculated according to Standardised approach requirement (i.e. new standardised + IRB capital requirement >= 72.5% capital requirement considering the full portfolio under standardised treatment) 5. Relative weight on total expected impact based on preliminary assessment

75 2019 CET1 ratio target confirmed whilst anticipating additional regulatory headwinds Fully loaded CET1 ratio evolution to 2019, % Regulatory headwinds % 9M17 4Q Regulation, models and procyclicality IFRS Confirmed expected regulatory impacts of EBA guidelines (anticipation) etc. 3 Partial anticipation mainly on Italian models Organic Capital Generation Total CET1 impact, % Fully loaded CET1 ratio, % 13.8 >13.0 4,5 12.2/12.7 >12.5 Dividend payout 20% 20% 30% Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1 January Partial anticipation impacts include EBA guidelines related effect and other minor adjustments 4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit 5. Pro-forma for IFRS9 6. Including LGD incomplete workout treatment, margin of conservatism and higher weight of stressed macroeconomic scenario in selected Italian models

76 Providing transparency and clarity on regulatory headwinds post 2019 Regulatory headwinds Regulatory Headwinds post 2019 CET1 ratio impact (managerial estimates) % of cumulative phase-in Estimated CET1 impact, % up to 2027 EBA guidelines (remaining) % 100% Calendar provisioning % 37% 54% 66% 86% 100% FRTB % 65% 100% Basel IV 3 < % 40% 60% 80% 100% Estimated CET1 impact, % -0.2 < Cumulative net CET1 impact +0.3 < > +1.7 including organic capital generation 4, % Conservative approach based on ECB proposal has been used 2. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 4. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout

77 EBA guidelines impact on KPIs through model changes, mainly Loss Given Default Regulatory headwinds Input Model Parameter Impacts on KPIs All historically realised losses factoring new EBA Guidelines (i.e. incomplete workout 1 ) Increase of Loss Given Default (LGD) Higher Expected loss 2 Higher CoR Quality of underlying business unchanged Incomplete workout includes defaulted positions on which collection activities are still ongoing 2. Expected Loss: Loss Given Default (LGD) * Probability of Default (PD) * Exposure at Default (EaD)

78 2019 Group CoR confirmed even with impact of regulation and model changes Regulatory headwinds Group Cost of Risk 1 Comments Bps % improved from previous Group CoR unchanged thanks to improvement of underwriting, offsetting impact of model changes, equal to 4bps Higher one-off impact of model changes in 2018, mainly due to partial anticipation of EBA guidelines, affecting both stock and flows Main effect on Commercial Banking Italy with 17bps in 2018 and 5bps in 2019, including partial anticipation of EBA guidelines Impact from model changes in 2018 and 2019 Underlying business 1. Delta for line adjustment from accounting changes 17

79 Gross NPEs down by a further 4.0bn by end 2019 thanks to decisive de-risking Group 2019 NPEs targets Comments Gross NPEs, bn bn lower than previous target bn lower than previous target Previous target 2019 target 2.0 bn lower than previous target NPEs target for Group Core down a further 2.0bn thanks to active recovery strategy and disposals in CEE Decisive de-risking resulting in an additional 2.0bn reduction of 2019 Non Core NPEs target Group 1 Group Core 1 Non Core 1. CEE Division excluding Turkey 18

80 2019 Gross NPEs ratio target for Group Core down to 4.7% Group Core Group Core - NPEs evolution Comments Gross loans 1, bn Gross NPEs ratio 2, % NPEs Coverage, % 5.8% 0.3% 2.4% 3.0% 9M % 0.3% 2.2% 2.5% 9M % 0.3% 2.2% 2.2% 2019 Gross NPEs, bn >51 previously 5.0% PD UTP Bad Loan 2.0bn better than previous target of 25.1bn 2019 Gross NPEs ratio target improved from 5.0% to 4.7% thanks to 2.0bn lower NPEs stock target 2019 NPEs coverage ratio target confirmed >51% Bad Loans Coverage, % UTP Coverage, % CoR, bps >64 >39 43 previously CoR target revised lower by 2bps to 43bps Including repos, excluding intercompany and line adjustment effect 2. Calculated as: Gross NPEs / Gross Loans 3. Including line adjustments from accounting changes

81 Further reduced 2019 Gross NPEs target thanks to proactive actions on Non Core Non Core Non Core evolution Non Core dynamics 9M Gross Loans, bn Gross loans, bn Performing NPEs bn lower than previous target of 19.2bn "Back" to Core Repayments 3 Mostly corporate and mortgages Mainly driven by corporate, small business M Disposals Both single name and portfolios -4.6 Net Loans 1, bn previous target Recoveries 4 Cash recoveries on workout and UTP -3.2 NPEs coverage, % 57.1 >57 UTP coverage, % 45.1 >38 Write-offs Active portfolio management and cost optimisation -3.2 Bad loans cov., % 64.2 >63 Total Excluding intercompany and repos bn Bad Loans (19% Corporate, 15% Small business, 4% Old Vintage, 3% Individuals, 39% Mortgages,20% Leasing), 3.7bn UTP (67% Corporate, 6% Small business, 1% Individuals, 12% Mortgages, 14% Leasing) and 0.2bn Past Due 3. Including Debt to Equity swap 4. Including 0.4bn Leasing asset disposals

82 Non Core reduction of 2.0bn thanks to clear leasing run down strategy Non Core Leasing Non Core evolution Actions to reduce the Leasing Non Core portfolio Gross Loans, bn Single asset disposals/ recovery Increase asset sales by intensifying remarketing activity and improved sale process 3.1 Residual claims portfolio disposal Disposals of residual claims portfolio (i.e. difference between the disposal of the underlying collateral owned by UC Leasing and the original claim) 9M16 9M Write-off Write-offs of NPEs with full provision and old vintage 21

83 Active disposals and recovery drive the run down strategy Non Core Non Core disposals (excluding FINO transaction) Recovery strategies Gross loans, bn Transform 2019 disposal activity has two main areas of focus: - Portfolios, 2.9bn - Single names, 2.9bn Single Names Portfolio Total Securitisation vehicles: Sandokan (Real Estate), and Pillarstone (Large Industrial) Implementation of turnaround plans with dedicated restructuring specialists in order to optimise recoveries and migration from UTP to Bad Loans Current portfolio managed through securitisation vehicles kept on balance sheet, but deconsolidation potentially achievable 1. Of which 1bn planned in 4Q17 22

84 Self-funded full rundown of Non Core by 2025 Non Core Non Core rundown strategy Non Core evolution Gross loans, bn Performing component of Non Core reduced to zero by end 2018, meaning no new NPEs flows onwards 2019 NPEs target down by 2.0bn from 19.2bn to 17.2bn Decisive drop until 2022, especially on Mortgages, Leasing and Corporate portfolios Full rundown by 2025 leveraging on improving recoveries and active disposals on Leasing, Residential Mortgages and Corporate M Rundown 2025 PD UTP Bad Loans Performing bn Bad Loans (19% Corporate, 15% Small business, 4% Old Vintage, 3% Individuals, 39% Mortgages,20% Leasing), 3.7bn UTP (67% Corporate, 6% Small business, 1% Individuals, 12% Mortgages, 14% Leasing) and 0.2bn Past Due

85 Closing remarks Improved asset quality in 2017 thanks to proactive actions on stock and disciplined origination Proactive anticipation of European regulatory changes FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q CoR target of 55bps 1 unchanged thanks to disciplined risk management Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Self-funded full rundown of Non Core by Previously 49bps; delta for line adjustments from accounting changes (see annex slide 35)

86 One Bank, One UniCredit Transform 2019 CFO presentation M. Bianchi London, 12 December 2017

87 One Bank, One UniCredit The five pillars ONE BANK ONE 5 STRATEGIC PILLARS STRENGTHEN AND OPTIMISE CAPITAL IMPROVE ASSET QUALITY TRANSFORM OPERATING MODEL MAXIMISE COMMERCIAL BANK VALUE ADOPT LEAN BUT STEERING CENTRE 2

88 Transform 2019 key targets confirmed with an improved risk profile Transform 2019 Transform 2019 on track Improved asset quality Confirm capital target 2019 revenues target confirmed: higher relative contribution of fees and commissions 2019 cost target confirmed: higher HR savings allowing for additional IT investments 2019 RoTE target confirmed: >9% Gross NPEs down by a further 4.0bn 1 by end 2019, better than initial Transform 2019 target Thanks to decisive actions Group NPEs exposure has materially reduced Self-funded full rundown of Non Core by 2025 SREP Pillar 2 requirement lowered by 50bps to 200bps. CET1 MDA buffer confirmed above 200bps until end 2019, above 250bps after fully loaded CET1 ratio target confirmed >12.5% including partial anticipation of regulatory headwinds Post 2019, annual CET1 ratio 2 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds FY19 dividend 3 payout increased from 20% to 30% thanks to a solid capital position Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed 3 1. Of which: Non Core down by 2.0bn from 19.2bn to 17.2bn and Group Core down by 2.0bn from 25.1bn to 23.1bn 2. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 3. To be paid in 2020 Note: CET1 ratio fully loaded and data in Euro throughout the document unless otherwise stated

89 CEE Eurozone Mid Swap 10Y Euribor 3M Supportive economic outlook whilst increase in rates now expected in 2H19 Real GDP growth y/y and average, % 2.2 Growth in line with consensus Bps, EoP Interest rates and yield environment 1Q 2Q 3Q 4Q Avg Macro Avg UC estimates Dec 16 UC current estimates 2 UC estimates Dec 16 UC current estimates 2 Current Consensus 3 Current Consensus 3 Bps, average Avg Avg UC current estimates UC estimates Dec 16 2 UC estimates Dec 16 2 Current Consensus 3 UC current estimates Current Consensus Average calculated on a quarterly basis 2. Previously included in Transform GDP growth: Consensus Forecast (Eurozone) and Focus Economics (CEE); 3M Euribor: future from Bloomberg as of 6 th December 2017; Swap 10Y: forward from Bloomberg as of 6 th December 2017

90 Transform 2019 yielding tangible results underpinned by group-wide business momentum Achievements as of 9M17 Transform 2019 Strengthen and optimise capital Improve asset quality Transform operating model Maximise commercial bank value All announced decisive strategic actions successfully completed: 13bn rights issue, Pioneer and Pekao disposals Strengthened capital and enhanced liquidity buffer, well in excess of 195bn FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18 Active NPEs portfolio management with disposals in Italy and CEE FTE reductions and branch closures progressing ahead of schedule Improving customer experience thanks to streamlined processes Strong commercial dynamics thanks to network revamp "One Bank" business model replicated across full network, driving synergies and streamlined operations >500bps generated by strategic actions >100% LCR/NSFR 3.6bn of NPEs disposal completed since 3Q16, excluding FINO 10.6% gross NPEs ratio, down by 4.5p.p. vs 9M16 51% of planned FTE reductions 59% of planned branch closures 58% cost income ratio, down 0.7p.p. vs 9M16 52bn new loan production in 9M17, +14% vs 9M16 13bn AuM Net Sales in 9M17, +7bn vs 9M16 Adopt lean but steering centre Strengthened corporate governance as well as simplified share capital structure Decreasing weight of Group Corporate Centre on Total Costs Weight of Group Corporate Centre of total costs down from 5.1% in 2015 to 3.8% in 9M17 to 3.5% by Transform 2019 fully on track

91 Line adjustments from accounting changes (1/2) Line adjustments Accounting change 1 Description Impact Net effect NPEs time value accounting 2 New Bank of Italy regulation requires to account for Time value release as NII and no longer as LLP write-back NII LLP 0 Combined effect in 2019 bn NII +0.2 NPEs accrued interest Interest from UTP and Past Due calculated on Net Book Value rather than Gross Book Value resulting in lower NII and lower associated LLP, according to IFRS9 guidance NII LLP 0 LLP Loans to customers Reclassification of customers loans Customers debt securities in issue 3 excluded from customers loans and included in financial asset Loans to customers Financial assets 0 Financial assets +12 No Net Income and RoTE impact 6 1. All effects from Difference between (i) the sum of expected recoverable cash flows of NPEs and (ii) its Net Present Value (i.e. Net Book Value) 3. Currently included in loan book

92 Line adjustments from accounting changes (2/2) P&L, bn Line adjustments 2015 Transform 2019 targets Previous Delta Restated Previous Delta Restated Revenues of which NII LLP Net income Other Combined effect equal to zero Loans 2, bn CoR 4, bps Cost/Income % -1.6p.p % <52% -0.6p.p. 1 <52% 7 1. Delta given by effect of: NPEs time value accounting, NPEs accrued interest 2. Excluding repos 3. Delta given by effect of: reclassification of customers loans 4. Cost of Risk computed as LLP over average loans 5. Delta given by effect of: NPEs time value accounting, NPEs accrued interest, reclassification of customers loans 6. Cost/Income computed as total operating cost over revenues

93 2019 key targets confirmed RoTE target >9% and further 4.0bn reduction of NPEs Key targets Line adjustment bn, unless otherwise stated Revenues Cost unchanged LLP Net Income 4.7 unchanged Cost/income <55% <52% unchanged Cost of risk Gross NPEs stock 68bps 55bps 40.3 down by 4.0bn from 44.3bn +6bps 1 improved RoTE >9% unchanged CET1 ratio % >12.5% unchanged line adjustment due to accounting changes 8

94 2019 overall revenues target confirmed: higher relative contribution of fees and commissions P&L - Revenues Revenues target confirmed different mix 1 bn CAGR: +0.2% target confirmed bn \ Restated New Trading Income, Dividends and Other Fees & Commissions NII Trading Income, Dividends and Other Fees & Commission NII 1. Figures included line adjustment restatement as per slide 7 9

95 Increased fee target thanks to higher investment and transactional fees P&L - Fees Fees and commissions mix evolution AuM penetration and dynamics in Italy bn 6.5 CAGR: +2.3% increased from previous target of 7.0bn AuM/TFA, % 33% 36% 41% M AuM, bn Investment Financing Transactional M TFA TFA restated to include elisions of intragroup custody services

96 NII target affected by lower for longer interest rate scenario and less dynamic loan growth bn NII evolution Main components Commercial dynamics: +0.7bn Lower by 0.1bn vs. previous target bn net loans 4 CAGR '15-19 updated: [xx]% Previous line Restated adjustment P&L NII -11 Loan dynamics 444 New NII evolution by year bn guidance Line adjust. 2 Loans Deposits Term Invest.ptf & FX effect markets/treasury funding Other Net Loans guidance Q19 annualised Delta calculated versus target 2019 restated at 11.1bn, as per line adjustments in slide 7 2. Line adjustments on 2017 guidance 3. Including 2017/2019 time value reduction 4.Excluding repos

97 2019 cost target confirmed: adjusted mix with higher HR savings P&L Cost Cost reduction confirmed CAGR 2019 '15-19 savings: updated: [xx]% adjusted mix bn bn bn annual recurring net cost savings target confirmed 35% 30% 65% 70% Previous New Non-HR Cost HR Cost HR Costs 2015 Non-HR Costs HR Savings Non-HR Savings M Cost evolution by year bn >34% cost saving 12.2 < Cost/ income 60.0% 57.9% <52% guidance Additional IT investments thanks to higher HR savings

98 FTE and branch reductions ahead of schedule HR costs evolution Non-HR costs evolution P&L Cost bn CAGR: -4.2% -4.7% bn CAGR: -2.8% -2.5% M16 9M M16 9M k / -14% FTE, ' % achieved -944 Branches 2, # 3,809 3,629 3,252 2,865 72% 3 achieved as of November M16 equal to 3,438m, 9M17 equal to 3,353m 2.Western Europe retail branches 3. Including additional 121 branch closures in Italy already completed as of November 17

99 Coverage Ratio Gross Ratio Improved NPE ratio thanks to decisive de-risking actions Risk Ratios % NPE 1 UTP 1 Bad Loans CoR evolution bps target confirmed M16 9M M16 9M M16 9M > > > M16 9M M16 9M M16 9M Underlying business 3 Model changes , 9M16 and 9M17 stated figure 2. Includes line adjustment 3. Includes line adjustments: for 2018 equal to 7bps and for 2019 equal to 6bps

100 Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Gross NPEs, bn PD UTP Bad Loan Net Loans 2, bn Gross NPEs ratio 3, % NPEs Coverage ratio, % Group Core NPEs evolution M CoR, bps M bn better than previous target of 25.1bn > Gross loans, bn Performing NPE Net loans 2, bn NPEs Coverage ratio, % M Self-funded full rundown of Non Core by 2025 Non Core evolution M bn better than previous target of 19.2bn > Asset Quality FINO phase 2 signed For 9M16 and 9M17 stated figure 2. Excluding intercompany and repos 3. Calculated as: Gross NPEs / Gross Loans including repos 4. Includes line adjustment, previously 45bps 5. Closing expected in 1Q18

101 2019 fully loaded CET1 ratio target confirmed and FY19 dividend payout increased from 20% to 30% Fully loaded CET1 ratio evolution to 2019, % Capital % 9M17 4Q Regulation, models and procyclicality IFRS Confirmed expected regulatory impacts of EBA guidelines (anticipation) etc Organic Capital Generation Total CET1 impact, % Fully loaded CET1 ratio, % 13.8 >13.0 4,5 12.2/12.7 >12.5 Dividend payout 20% 20% 30% Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1 st January Partial anticipation, impacts include EBA guidelines related effect and other minor adjustments 4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit 5. Pro-forma for IFRS9

102 Cumulative organic capital generation above estimated regulatory impacts post 2019 Regulatory Headwinds post 2019 CET1 ratio impact (managerial estimates) % of cumulative phase-in Estimated CET1 impact, % up to 2027 EBA guidelines (remaining) % 100% Calendar provisioning % 37% 54% 66% 86% 100% FRTB % 65% 100% Basel IV 3 < % 40% 60% 80% 100% Estimated CET1 impact, % -0.2 < Cumulative net CET1 impact +0.3 < > +1.7 including organic capital generation 4, % Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio 5 >12.5% Conservative approach based on ECB proposal has been used 2. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 4. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout 5. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates)

103 SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps after 2019 Capital Requirements Capital evolution 1 % CET1 ratio Tier 1 Capital ratio Total Capital ratio 16.1/16.5 > /12.7 > /3.5 > Lower Pillar 2 Requirement by 50bps / / >14.0 > / > Requirement 3 Buffer 2019 MDA buffers confirmed above 200bps, fully loaded requirements already fulfilled Transitional requirements and ratios CET1r fully loaded requirements and ratios for New Pillar 2 Requirements for 2018 at 200bps, assumed constant for Includes: (i) Pillar 1, (ii) Pillar 2, (iii) Capital Conservation Buffer, (iv) G-SIFI and (v) Countercyclical buffer; see annex for further details

104 Optimised TLAC funding plan UniCredit SpA TLAC funding plan: UniCredit Group funding plan TLAC TLAC requirement 1 : >19.6% Target 2019 >20.5% Updated funding plan bn of which to be issued bn Senior outst. TLAC eligible 2 Senior Preferred 2.5% Senior bond exemption Subordinated req.: >17.1% >18.0% Previously 13.35bn Senior Non Preferred Tier AT Previous New 4 CET1 ratio Total TLAC funding plan Covered Bonds Previously 26.4bn Unsecured funding Supranational and other m/l term funding TLAC transitional requirement (Pillar 1 MREL). MREL binding requirement to be communicated by SRB in 1Q bn, outstanding senior bonds, not part of the funding plan bn AT1 planned of which 500m AT1 already executed in December'16 4. For comparison purposes vs. Previous Funding Plan, 1.7bn Supranational funding in Bank Austria would have to be excluded

105 2019 Group Core profitability above 10% Group Core profitability 2019 Group profitability 2019 Allocated Capital 1, bn bn Non Core Allocated Capital to cover all future losses until final rundown. RoAC 1, % bn net result in 2019 Fully run down in hence, Group Core represent future normalised view CB Italy CB Germany CB Austria CEE CIB GCC Non Core >10% 2019 Group Core RoTE 2 >9% 2019 Group RoTE 4.7% 2019 Group Core NPE ratio Allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA, net of capital deductions 2. Tangible Equity calculated as 2019 Tangible Equity net of 2019 Non Core Allocated Capital (12.5% of RWA) Group NPE ratio equal to 7.8%

106 2019 key targets confirmed M Key targets Revenues, bn Cost, bn Net income, bn Cost/income, % <55 1 <52 1 Cost of Risk, bps RoTE, % CET1 ratio,% > / 12.7 >12.5 RWA, bn Gross NPEs, bn Gross NPEs ratio Group, % Gross NPEs ratio Group Core, % Net Income and RoTE target confirmed down by 0.3 from of 5.0 Net NPEs, bn down by 4.0bn from 44.3bn down by 0.6 from 8.4 down by 2.5 from of Including line adjustment from accounting changes as per slide 7 2. Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao and Pioneer disposals as at 1 January 2017

107 Closing remarks Closing remarks Transform 2019 yielding tangible results underpinned by group-wide business momentum 2019 key targets confirmed Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Self-funded full rundown of Non Core by 2025 SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps after fully loaded CET1 ratio target confirmed >12.5% including partial anticipation of regulatory headwinds Post 2019, annual CET1 ratio 1 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds FY19 dividend 2 payout increased from 20% to 30% Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed Refers to CET1 ratio phasing-in regulatory headwinds post To be paid in 2020

108 Q&A session

109 One Bank, One UniCredit Transform 2019 Closing Remarks J. P. Mustier London, 12 th December 2017