The UBI Banca Group Consolidated Results as at 31 st December th March 2014

Transcription

1 The UBI Banca Group Consolidated Results as at 31 st December th March 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 March 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 ( ) PROPOSED DIVIDEND PER SHARE FY12 FY13 CORE TIER 1 CET 1 (fully loaded) TOTAL CAPITAL RATIO 10.3% 12.6% > 9% > 10% 16.0% 18.9% Dec '12 Dec '13 Mar '13 Dec '13 Dec '12 Dec '13 LCR & NSFR LEVERAGE (Basel 3)* LOAN TO DEPOSIT RATIO > 1 >1 >1 >1 NSFR > 1 also net of LTRO 5.07% 5.16% 94.0% 95.5% < 100% Dec '12 Dec '13 Sept' 13 Dec '13 Dec '12 Dec '13 * On the basis of Basel 3 requirements, the minimum financial leverage ratio is set at 3%, in order to contain total banking debt and as a consequence, the tier one capital must be equal to at least 3% of on- and off-balance-sheet assets 3

4 Executive summary NET PROFIT ( mln) in 4Q13 49 in 3Q in 4Q12 FY12 FY13 NET INTEREST INCOME NET RESULT FROM FINANCE TOTAL OPERATING INCOME 1,864 1, ,526 3,437 +3% 4Q/3Q +164% 4Q/3Q -6.1% +26.1% -2.5% +10% 4Q/4Q +43% 4Q/4Q +14% 4Q/3Q +7% 4Q/4Q FY12 FY13 FY12 FY13 FY12 FY13 NET OPERATING EXPENSES NET OPERATING INCOME LLPs FY12 FY13 1,260 1,295 FY12 FY13 +1% 4Q/3Q +36% 4Q/3Q -5.5% +2.8% +11.3% -6% 4Q/4Q +30% 4Q/4Q (847) (2,267) (2,142) FY12 FY13 (943) +90% 4Q/3Q +4% 4Q/4Q 4

5 Executive summary Announced actions to support future profitability Gross yearly savings at regime Further staff optimisation (-183 units) to be implemented within June 2014, enabled by 26 mln net leaving incentives booked in 4Q13; 15 mln savings at regime 15 mln Reimbursement of Tier 1 instruments in Feb/Mar 2014 ( 340 mln, 595 bps spread) 22 mln Early reimbursement on 7 th March 2014 of 3 bln State guaranty bond ( 2 bln expiring in Jan/Feb 2017 and 1 bln in Feb 2015)* 20 mln * The remaining 3 bln will expire in Jan/Feb

6 Lending volumes: confirmation of first signs of progressive improvement in new origination inflows of medium/long term lending in bln 31 Dec '12 30 Sept '13 31 Dec '13 % YoY changes % QoQ changes FOCUS ON MEDIUM / LONG TERM STOCK ( 64 bln) Retail % -1.0% of which: Private Customers % 0.2% Corporate Small business % -1.7% UBI Banca (former Banca 24/7)* % -2.7% Prestitalia* % -3.1% % -2.3% of which: Core corporate % -1.6% Private Other** Large corporate % -1.9% UBI Banca (former Centrobanca) % -4.7% % 1.6% % -2.1% of which: UBI Leasing % -2.0% Total UBI Factor % 5.4% UBI*** % -12.6% Small business: turnover up to 15 mln Core Corporate: turnover from 15 to 250 mln Large Corporate: turnover > 250 mln % -1.6% Network banks: approx. 43 bln New origination Reimbursement 86% in FY13 = vs. 81% in FY12 mainly thanks to growth in new mortgage loans granted to: private customers (+10.7% YoY) corporate sector (+11.8% YoY) while new origination of small business is still down (approx. 5%) Product companies: approx. 14 bln UBI Leasing, Prestitalia, former Centrobanca, captive consumer finance New origination Reimbursement = 38% in FY13 Stock in run-off: approx. 7 bln 22% of YoY decrease explained by portfolio in run off ( 6.7 bln at end 2013 vs 7.2 at end 2012, mainly former Banca 24/7 and Leasing) and disposal of BDG ( 0.2 bln) * 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 ** Minor companies, IAS adjustments, loans not segmented to commercial portfolios and intercompany eliminations *** UBI net of intercompany 6

7 UBI Banca s liquidity position allowed optimisation of higher cost funding with a benefit in terms of NII Loan to Deposit ratio: 95.5% 100% ~80% ~20% IAS amounts in bln 31 Dec '12 30 Sept '13 31 Dec '13 TOTAL DIRECT FUNDING % -6.3% FROM ORDINARY CUSTOMERS % -7.1% Current accounts & deposits (other than CCG) % -4.7% CCG (run-off due to new regulation) Term deposits, other payables and repos % -44.8% Securities in issue: Network banks + UBI % -1.6% Extra-captive customers* % -6.2% Other (mainly customer CDs) % -20.5% FROM INSTITUTIONAL CUSTOMERS % -2.9% Securities in issue: Covered Bonds % 21.5% EMTN % -41.4% CD and ECP % -68.7% Preferred shares % 0.0% Repos with CCG % 39.4% quarterly % changes annual % changes Current accounts and deposits evolution YoY reflects funding strategy allowed by strong liquidity position (- 2.5 bln of higher cost more volatile institutional and large corporate funding) and disposal of BDG in November 2013 (- 0.2 bln). QoQ, current accounts are up by 0.5% net of BDG disposal Term deposits contraction supports further improvement in mark down (+15 bps YoY and +73 bps 4Q13/4Q12) 0.64 bln soft mandatory convertible bond redeemed in July 13 Retail bonds replacement rate: >100% In Oct 2013, issuances of: 1.25 bln Covered Bond 0.75 bln Emtn Full redemption of preferred shares (announced on 27th December 2013) to be completed in March 2014 * Bonds placed on third party banks networks 7

8 Securities in issue: retail bonds placed to ordinary customers show significant decrease in spreads Maturities Network banks, UBI Banca and former Centrobanca* (Nominal amounts in bln, netted of bond repurchases) Issuances Since 2013, the issuance of retail bonds has been optimised and retail bonds are issued by UBI Banca. Spreads vs. 6M Euribor on new issuances have progressively tightened without affecting the replacement rate which is still >100%: FY FY Q and following In 2013, issuances of retail bonds for approx. 6.8 bln, with an average time to maturity of 3 years. Within these issuances the Group have offered funding instruments with high social and ethic impact, i.e.: 2014 Maturities ( bln) 1Q14 2Q14 3Q14 4Q14 Network banks, UBI Banca and former CB* Since the initiative launch (April 2012) to date, UBI Banca and Network Banks have offered UBI Community Social Bonds: 45 issuances, i.e. ~ 470 mln/ average maturity: 30 months charitable donations > 2.4 mln/ * Centrobanca merged in UBI Banca in May Extra-captive: bonds placed on third party banks networks 8

9 Securities in issue: EMTN and Covered Bonds (Institutional investors) UBI latest issuances welcomed by the institutional markets; ~ 2 bln/ bonds maturing throughout 2014 already refinanced Maturity profile of EMTN and CB stocks 2 bln issued in 1Q EMTN 0.55 Covered Bonds* Jan / Feb 2014 issuances and following COVERED BOND Size: 1 bln Issued in January 2014 Maturity: 10 year (Feb 2024) Fixed rate: 3.125% Order book: > 4x Allocation by geography and by investor type Italian investors 30% Foreign investors 70% Insurance and pension funds 16% Banks 17% Others 2% Fund managers 65% 2014 Maturities ( bln) 1Q14 2Q14 3Q14 4Q14 EMTN Covered bonds (Nominal amounts in bln) EMTN Size: 1 bln Issued in February 2014 Maturity: 5 year (Feb 2019) Fixed rate: 2.875% Order book: > 4x Italian investors 45% Foreign investors 55% Insurance and pension funds 19% Banks 16% Others 12% Fund managers 53% * Inclusive of 0.5 bln of private placement with BEI expiring within 2022 and a tap (related to the 7 year 1,250 bln public covered bond ) for 0.25 bln. Further 1.75 bln retained issue not included 9

10 Italian Govies proprietary portfolio stable QoQ at around 19.7 billion Financial Assets: Total Portfolio (of which Italian Govies) ( mln) 21,383 21,576 21,841 IT GOVIES 17,966 IT GOVIES 19,445 IT GOVIES 19, Dec Sept Dec 13 Italian Govies portfolio breakdown: 31 December bln, IAS values AFS (Available for sale) 71% 13% 16% HFT (Held for trading) Not included by ECB in comprehensive assessment HTM (Held to maturity) AFS Reserve evolution on Italian Govies ( mln) 30 Sept '11 31 Dec '12 31 Dec '13 11 Mar '14 Maturity Profile (market values, bln) Over 3.2 Reference for EBA capital exercise as at 8 th Dec 2011 Modified Duration of Italian Govies portfolio: 1.7 years 10

11 As at 7 March 2013, reimbursed, after obtaining authorisation, 3 bln of Government Guaranteed bonds. This notwithstanding, total eligible assets amount to 33.6 bln. Unencumbered eligible assets at 18.8 bln Eligible assets*: 33.6 bln (net of haircut) of which Eligible assets breakdown Italian Govies Gov. Guaranteed bonds Retained securitisations Retained covered bonds *** Other (ABACO) % ~ 66% ~ 8% ~ 13% ~ 8% ~ 5% Unencumbered eligible assets: 18.8 bln ~44% of short term deposits High-quality available assets guarantee immediate access to liquidity Eligible assets pledged for LTROs*: 12.3** bln Eligible assets used in CCG repos: 2.5 bln * 6 bln of LTRO were taken in December 2011, further 6 bln in February 2012 ** Including among others interest expense accrued *** 0.9 bln on the 10 bln Retail Mortgages CB Programme, 1.7 bln on the 5 bln Commercial Mortgages CB Programme (net of haircut) 11

12 Net Profit: 251 mln in 2013 vs. 83 mln in 2012 MAIN INCOME STATEMENT ITEMS Figures in mln FY12 FY13 % change Net interest income 1,864 1,751 (6.1%) Net commission income 1,182 1, % of which: performance fees (28.1%) Net result from finance % Other income items (21.7%) Operating income 3,526 3,437 (2.5%) Staff costs (1,374) (1,302) (5.2%) Other administrative expenses (702) (660) (6.0%) Net impairment losses on property, equipment and investment property and intangible assets (191) (180) (5.7%) Operating expenses (2,267) (2,142) (5.5%) Net operating income 1,260 1, % Net impairment losses on loans (847) (943) 11.3% Net impairment losses on other financial assets and liabilities (55) (48) (13.3%) Net provisions for risks and charges (49) (12) (74.9%) Profits (losses) from disposal of equity investments 15 (7) n.s. Pre-tax profit from continuing operations (11.7%) Taxes on income for the year from continuing operations (121) 55 n.s. Profit for the year attributable to non-controlling interests (17) (26) 49.6% Profit for the year attributable to the shareholders of the Parent before charges for exit incentives and impairments on tangible and intangible assets Impairment on tangible and intangible assets (net of tax and non-controlling interests) Charges for exit incentives (net of tax and non-controlling interests) % (38) n.s. (102) (26) n.s. Net result from finance includes the capital gain on revaluation of stake in Bank of Italy ( 29 mln the disposal of the whole residual participation in Intesa Sanpaolo ( 50 mln) Costs benefit from containment actions both in terms of headcounts and outsourced services, travel expenses, etc... Contribution to Interbank Deposit Protection Fund in favour of Banca Tercas: 17 mln gross Taxes on income include: negative effect of additional IRES taxes established by Italian Law Decree no. 133/2013 ( -33 mln) positive effect of deductibility, for IRAP purposes, of impairments on loans introduced by the 2014 Stability Law ( +50 mln) IRAP tax relief on goodwill ( +213 mln), not previously recognised for prudential reasons Tax rate net of non-recurring items: 52.1% Profit for the year n.s. Profit for the year NET OF NON-RECURRING ITEMS % Further detail on non-recurring items in annex 7 PPA allocated line by line 12

13 4Q Net Profit: 149 mln in 2013 vs. -46 mln in 2012 MAIN INCOME STATEMENT ITEMS Figures in mln 4Q12 3Q13 4Q13 % YoY % QoQ Net interest income % 3.0% Net commission income (3.8%) 4.6% of which: performance fees (28.1%) n.s. Net result from finance % 164.2% Other income items (31.8%) (15.0%) Operating income % 14.0% Staff costs (336) (328) (327) (2.7%) (0.2%) Other administrative expenses (188) (159) (166) (11.8%) 4.6% Net impairment losses on property, equipment and investment property and intangible assets (50) (45) (45) (9.0%) 1.1% Operating expenses (574) (532) (538) (6.2%) 1.3% Net operating income % 36.4% Net impairment losses on loans (353) (193) (366) 3.9% 90.1% Net impairment losses on other financial assets and liabilities (4) (5) (25) n.s. n.s. Net provisions for risks and charges (28) (3) 2 n.s. n.s. Profits (losses) from disposal of equity investments 6 (1) (8) n.s. n.s. Pre-tax profit/loss from continuing operations (62) n.s. (84.7%) Taxes on income for the period from continuing operations 18 (46) 205 n.s. n.s. Profits for the period attributable to non-controlling interests (2) (6) (8) n.s. 33.6% Profit/loss for the period attributable to the shareholders of the Parent before charges for exit incentives and impairments on tangible and intangible assets (46) n.s. n.s. Impairment on tangible and intangible assets (net of tax and non-controlling interests) Charges for exit incentives (net of tax and non-controlling interests) (38) n.s. n.s. - (26) n.s. n.s. Profit/loss for the period (46) n.s. n.s. Profit/loss for the period NET OF NON-RECURRING ITEMS (83) n.s. 17.8% Further detail on non-recurring items in annex 7 PPA allocated line by line 13

14 Net Interest Income at 1,751 mln, recovering progressively QoQ in 2013 ( mln) 1,864 FY12-6.1% +3.0% +4.2% +2.6% Q13 2Q13 3Q13 4Q13 1,751 FY13 Given current market conditions, expected further improvement in 2014 further liability cost reduction higher expected rate of medium/long term loan inflows Main driver coming from improvement in customer business: 80% of NII BUSINESS WITH CUSTOMERS ( mln) Net of cost of funding Q12 1Q13 2Q13 3Q13 4Q13 in bps on avg. STOCK * 4Q12 1Q13 2Q13 3Q13 4Q13 1M Euribor UBI Group - Customer spread Mark up vs 1M Euribor Short term Medium-long term Mark down vs 1M Euribor Sight deposits Term deposits Retail bonds Institutional bonds Network Banks cust. spread** NEW ISSUANCES Avg. markup vs. 1M Euribor on Network Banks: 410 bps m/l term new origination loans vs. 235 bps m/l term avg. stock * Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI), unless otherwise stated ** Network Bank customer spread includes subordinated debt 14

15 Net Commission Income: +0.4% YoY; +1.2% excluding fee expense on State guaranty bonds and performance fees Net Commission Income ( mln) FY12 FY13 % YoY 4Q12 3Q13 4Q13 % 4Q13 vs. 4Q12 % 4Q13 vs. 3Q13 Guarantees (on State guaranty bonds) (42.8) (46.5) 8.7% BANKING RELATED COMMISSIONS % of which: Guarantees (bank ing activity) % Collection and payment services % Services for factoring transactions % Current accounts management % Other services % MANAGEMENT, TRADING & ADVISORY SERVICES* % of which: Portfolio management % Placement of securities % Third party services distribution % TOTAL 1, , % (11.7) (11.7) (11.7) 0.0% 0.0% % 3.0% % -7.3% % 10.1% % -5.0% % 4.3% % 1.5% % 6.0% % 32.8% % -35.8% % 0.4% % 4.6% In early March obtained authorisation to reimburse 3 bln bonds with state guaranty Fees on collection and payment services adversely affected by sluggish economy Portfolio management net commissions up by ~ 15 mln or 6.6% YoY (excl. perf. fees); Placement of securities fees up by nearly 19 mln YoY (14.4%), also thanks to the contribution of successful UBI Pramerica SICAV products ( 2.7 bln in 2012 and 3.1 bln in 2013) Including performance fees booked only in 4Q for 19.7 mln in 2012 and 14.2 mln in 2013 * Includes FX negotiations and excludes performance fees 15

16 Discipline in cost containment persists: -5.5% YoY 5th consecutive year of progressive reduction in total operating costs Total oper. costs D&A (incl. PPA*) Other Adm. Expenses Staff costs ( mln) 2, % 2, % % 660 1, % 1,302 FY12 FY13 STRUCTURAL DROP CONFIRMED -865 exits in 2013 also thanks Nov 12/Feb 13 trade union agreement: Mar 14 new trade union agreement: exits by July one off costs for 36 million gross ( 29 mln net) already recognised in 4Q13 - cost savings estimated at approx. 15 mln gross at regime in 2015 Drop in other administrative expenses thanks to strong control actions in place in all main item expenses and notwithstanding higher commercial campaign costs Total operating costs ( mln) of which Staff costs ( mln) of which Other admin. expense ( mln) -6.2% % -2.7% -0.2% % +4.6% Q12 3Q13 4Q13 4Q12 3Q13 4Q13 4Q12 3Q13 4Q13 * PPA effect amounted to 20.1 mln in 2012 and to 20.4 mln in

17 Cost savings generated since the Group s inception amount to 457 million (or approx. 690 taking into account inertial growth*) Total normalised Operating Costs Evolution (YoY, in %) FY08/FY07 FY09/FY08 FY10/FY09 FY11/FY10 FY12/FY11 FY13/FY12 0.1% -1.7% -0.7% -5.0% -6.2% -5.5% Total normalised Operating Costs Total normalised Operating Costs ( mln) 2,599** -17.6% 2,142 Achieved structural savings of 457 mln in 6 years (approx. 690 mln taking into account inertial growth) Further estimate of 15 mln structural yearly savings at regime from 2015 (March 2014 trade union agreement ) FY07 FY13 * Mainly national labour contract renewals, career advancements, inflation effect, VAT and indirect taxes increase ** Pro-forma figure as in 2008 financial report restated to include approx. 50 mln referred to staff severance provision released one off, due to amendments to supplementary pension legislation 17

18 Evolution of the distribution network reflects changing banking behaviours. Increase in staff dedicated to commercial activity vs. administrative roles Traditional Banking: # Branches Innovative Banking*: Online Banking Customers -12.4% 1,970 1,944 1,955 1,892 1,875 1,727 1, , , , % 708,000 1,220,000 1,070, ,000 1st April 2007 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec 07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 ~ 50% OF TOTAL EMPLOYEES PROVIDE ADVISORY/COMMERCIAL SUPPORT TO CUSTOMERS # Employees* Employees** 21,700 20,680 20, % 19,699 19,407 19,089 18, % 6.3% 28.1% 26.3% 27.3% 20.5% 37.9% 46.9% Product Companies UBI Banca, UBI.S and Network Banks Central Offices Operating Staff in Network Banks Commercial Staff in Network Banks 1st April 2007 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 1st April Dec 2013 * Year-end figures ** 2007 pro-forma figures to consider change in perimeter 18

19 Lower growth in deteriorated loans stocks in 2013 vs 2012 ( 1.7 bln vs 2.4 bln) Gross deteriorated loans amount ( /mln) bln bln 10,958 12,674 8,589 Dec '11 Dec '12 Dec '13 - STOCKS Lower (-28%) increase in deteriorated loans stocks in 2013 vs 2012: 1.7 bln vs 2.4 bln Quarterly CAGR 3.7% in 2013 vs 6.3% in INFLOWS & OUTFLOWS Inflows from performing loans to deteriorated loans down by 4.2% Significant increase in deteriorated loans returning to performing: +22.8% Inflows from performing loans to deteriorated loans and outflows from deteriorated to performing loans Inflows from performing loans to deteriorated loans and outflows from deteriorated to performing loans ( mln) INFLOWS - OUTFLOWS 4,307 3, % -12.1% 4,124 2,933 mln Inflows from performing to... Outflows from to perf. loans (inflows - outflows) % change Deteriorated Loans FY12 FY13 FY12 FY13 FY12 FY13 YoY Non Perf. (Sofferenze) % Impaired (Incagli) 1,964 1, ,492 1, % +22.8% Restructured n.s ,192 Past due 2,012 2, ,632 1, % Total Deteriorated 4,307 4, ,192 3,335 2, % Dec 12 Dec 13 19

20 Increase in total coverage of deteriorated loans Coverage 31 Dec '12 30 Sept '13 31 Dec '13 31 Dec '13 including write-offs 31 Dec '13 pro forma NPLs disposal Stated including write-offs Total deteriorated loans 26.04% 25.86% 26.52% 36.26% 27.10% 36.69% NPLs (sofferenze) 42.60% 41.30% 41.60% 56.05% 42.54% 56.56% Impaired loans (incagli) 12.63% 14.03% 15.12% 15.12% 15.12% 15.12% Restructured loans 14.84% 15.28% 13.94% 13.94% 13.94% 13.94% Past due loans 2.94% 3.06% 2.83% 2.83% 2.83% 2.83% Performing loans 0.55% 0.57% 0.61% 0.61% 0.61% 0.61% TRENDS IN NPLs AFFECTED BY: Disposals of highly provisioned positions: 2013: mln covered at ~93% 2012: mln covered at ~96% 2011: mln covered at ~98.5% Net of one-position ( 153 mln) included in 2Q13 and not provisioned for seen the high expectation of full recovery: Total deteriorate loans coverage = 26.85% NPLs coverage = 42.71% Fair value updated every 6 months type of prevailing guarantee: well over 60% of loan portfolio assisted by collateral (mainly real estate)* Total loan book > 60% Italian banking system** ~45% conservative loan to value***: Stocks Deteriorated 57.8% 44.8% Retail Perf orming Impaired loans Coverage of non collateralised deteriorated loans (including write-offs for non performing loans) 21.3% (Sept 13) 23.5% (Dec 13) +218 bps Impaired loans 62% 51.9% 42.1% NPLs 63% Italian banking system** 41% Corporate NPLs 71.8% (Sept 13) 72.3% (Dec 13) +48 bps Management data, figures as at Dec 13, unless otherwise stated * Adding up personal guarantees, over 77% of the portfolio is secured ** Source: Bankit-Bollettino Statistico II/2013, tables TDC30136 and TDC30033 *** Arithmetic mean, network banks 20

21 Increase in LLPs affected by delay in economic recovery and update in collective impairment calculation parameters* of which NET ANALYTICAL IMPAIRMENTS ( mln) = 26 TOTAL NET IMPAIRMENT LOSSES ON LOANS ,112 1, bps in coverage of total deteriorated loans up to 26.52% from 26.04% in FY12 ( mln) = 96 FY12 FY13 Writedown Writebacks See annex 5 for further detail FY12 FY13 of which NET COLLECTIVE WRITEDOWNS ( mln) = FY12 35 FY13 10% increase in coverage of performing loans up to 61 bps from 55 bps in FY12 * Following authorisations received from the Supervisory Authority, the UBI Group now uses internal models for the calculation of capital requirements for credit risk Corporate segments ( exposures to businesses ) and Retail (sub-portfolios retail: exposures backed by residential real estate and retail: other exposures) and operational risks 21

22 Outlook The forecasts of all the major study centres show Italy exiting from recession. However, the growth forecast is very low As concerns the UBI Group, under current market conditions, net interest income is expected to continue to improve, benefiting on the liabilities side from a reduction in the pressure on the cost of funding and on the assets side from the progressive replacement of medium to long-term loans, made in the past at lower spreads than those practised at present Fee and commission income is expected to be resilient A further decrease in sovereign debt risk could allow positive results to be achieved for trading and hedging activity again in 2014, although the magnitude is not easy to predict The downward trend for administrative expenses will continue, while the performance of personnel expense will also depend on the final outcome of the renewal of the national labour contract Even if economic recovery remains rather weak, loss loan provisions should show signs of improvement compared to

23 Reclassified balance sheet: highlights Annex 1 MAIN ASSETS ITEMS Figures in millions of euro % annual change % quarterly change Financial assets (AFS, HFT, FV, HTM) 21,383 21,576 21, % 1.2% Loans to customers 92,888 89,846 88, % -1.6% Property, equipment and investment property 1,967 1,909 1, % -5.8% Intangible assets 2,965 2,938 2, % -0.7% of which: goodwill 2,537 2,537 2, % -1.0% Tax assets 2,628 2,386 2, % 18.8% Other assets 1, % -0.9% Total assets 132, , , % -0.6% MAIN LIABILITIES AND EQUITY ITEMS Figures in millions of euro % annual change % quarterly change Net interbank position* 9,139 10,948 10, % -0.6% Due to customers 53,758 51,223 50, % -1.0% Securities issued 45,059 41,546 41, % 0.9% Tax liabilities % 22.1% Net worth attributable to the Parent 9,655 9,907 10, % 1.8% Non-controlling interests % 0.5% Profit for the period % 146.0% Total liabilities and equity 132, , , % -0.6% * Including 12 bln LTRO 23

24 Annex 2 Ratios as at 31 December 2013: Core Tier 1 at 12.60%, Tier 1 at 13.23% and Total Capital Ratio at 18.91% Figures in millions of euro 31 Dec 2012 Basel II AIRB 30 Sept 2013* Basel II AIRB 31 Dec 2013* Basel II AIRB Tier 1 (before filters) 8, ,204 8,353 Preference shares, minorities saving and priv. shares net of grandfathering Tier 1 capital filters Tier 1 (after filters) 8, , ,735.6 Deductions from Tier of which: negative elements for 50% deduction excess of expected losses over impairment losses Tier 1 after filters and specific deductions 8, , ,075.1 Supplementary capital after filters 4, , ,131.3 Deductions from supplementary capital of which: negative elements for 50% deduction excess of expected losses over impairment losses Supplementary capital after filters and specific deductions 4, , ,470.9 Increase from June 13 following adoption of AIRB model on Retail Credit Risk Deductions from Tier 1 + supplementary capital Total supervisory capital 12, , ,546.0 Credit risk prudential requirements 5, , ,436.5 Market risk Operational risk Total prudential requirements 6, , ,883.6 Tier III subordinated liabilities Computable value Risk weighted assets 76,589 60,282 61,046 In 4Q13, updating of PD and LGD historical data Core Tier I after deductions from Core capital 10.29% 12.53% 12.60% Tier I 10.79% 13.16% 13.23% Total capital ratio 16.01% 19.30% 18.91% * AIRB models both on network banks Corporate and Retail Credit Risk are applied as from June In Dec 12 AIRB models were applied only in the calculation of network banks Corporate Credit Risk Data as at 30 th September 2013 reported on a basis comparable with December

25 Securities Portfolio Details* Annex 3 Composition of the portfolio BY TYPE OF FINANCIAL INSTRUMENT Government bonds 91.1% 92.9% 93.2% Corporate bonds (mainly bank issues) 7.7% 6.0% 4.6% Hedge funds 0.6% 0.6% 0.6% Funds and shares 0.6% 0.5% 1.6% BY FINANCIAL PROFILE Floating rate** 26.0% 27.4% 20.4% Fixed rate 69.0% 67.7% 74.5% Structured securities 3.8% 3.8% 3.0% Shares, funds, convertible bonds 1.2% 1.2% 2.2% BY CURRENCY Securities in euro 99.5% 99.6% 99.7% BY GEOGRAPHICAL DISTRIBUTION Securites of the euro area 98.1% 98.6% 99.6% USA securities 1.1% 1.0% 0.0% BY RATINGS (BONDS) Investment grade 98.0% 98.9% 99.1% Average rating Baa1 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 83% of floating rate securities as at 31 st December

26 Asset Quality details Annex 4 LOANS TO CUSTOMERS - AS AT 31 DECEMBER 2013 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln CARRYING AMOUNT mln %* COVERAGE RATIO % NPLs (Sofferenze) 5, % 2,448 IMPAIRED LOANS (Incagli) 5, % 769 RESTRUCTURED LOANS % 122 PAST DUE % 24 3, % 41.60% 4, % 15.12% % 13.94% % 2.83% TOTAL DETERIORATED LOANS 12, % 3,362 9, % 26.52% TOTAL PERFORMING LOANS 79, % , % 0.61% TOTAL LOANS TO CUSTOMERS 92, % 3,843 88, % 4.17% LOANS TO CUSTOMERS - AS AT 30 SEPTEMBER 2013 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln CARRYING AMOUNT mln %* COVERAGE RATIO % NPLs (Sofferenze) 5, % 2,361 IMPAIRED LOANS (Incagli) 5, % 703 RESTRUCTURED LOANS % 105 PAST DUE % 29 3, % 41.30% 4, % 14.03% % 15.28% % 3.06% TOTAL DETERIORATED LOANS 12, % 3,198 9, % 25.86% TOTAL PERFORMING LOANS 81, % , % 0.57% TOTAL LOANS TO CUSTOMERS 93, % 3,664 89, % 3.92% * As a percentage of total loans 26

27 Analytical impairments details Annex 5 Analytical writedowns decreased by 7.7% ANALYTICAL IMPAIRMENTS ( mln) Writedowns Writebacks* 1,112 1, % FY11 FY12 FY13 4Q 3Q 2Q 1Q FY11 FY12 FY13 * Net of time reversal: 217 mln in FY11, 179 mln in FY12 and 158 mln in FY13 27

28 Indirect Funding Evolution Annex 6 in bln Dec 12 Sept 13 Dec 13 Dec 13 vs Sept 13 AUM (excl bancassurance) % Bancassurance % AUC % +2.6% net of BDG disposal in November 2013 Total Indirect Funding % Mix of AuM: breakdown by fund type in UBI Pramerica 30 Sept Dec 2013 Bond, 59% Balanced, 14% Equity, 13% Flexible, 3% Cash, 11% Balanced, 17% Equity, 13% Flexible, 4% Bond, 56% Cash, 10% Source: Assogestioni s PATRIMONIO GESTITO* aggregate * 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. 4.7 bln managed by Prudential 28

29 FY2013 and FY2012 non-recurring items: detail Post tax contribution of non-recurring items to net profit of the period (in mln) Annex 7 FY 2013 FY 2012 Net stated profit Net stated profit 82.7 Recognition of IRAP* DTA on tax relief on goodwill Disposal of equity stake Profit on Bank of Italy stake Profit on the repurchase of financial liabilities (subordinated EMTN) Prior year tax credit for deduction for IRES** of IRAP* on the labour cost Disposal of shares and investments Tax realignment pursuant to law n. 111/2011 and law 214/2011 of BPA goodwill recognised in the consolidated financial statement Net impairment losses on tangible and intangible assets Modification of 2013 IRES** tax rate Leaving incentives (37.7) (37.5) (26.0) Gain on public tender offer to purchase pref. shares 15.0 Tax relief on non-accounting deductions on loan provisions and write-down of UBI Banca purs. To law n. 244/2007 (section EC) 8.3 Net impairment losses on AFS financial assets (20.7) Leaving incentives (101.9) Intervention by the Interbank Deposit Protection Fund (11.4) Impairment losses on equity instruments and OICR (50.5) Disposal of equity investment (8.5) Net impairment losses on tangible and intangible assets (1.5) Net profit excluding non recurring items Net profit excluding non recurring items 97.3 * IRAP = regional production tax ** IRES = corporate income tax 29