The UBI Banca Group Consolidated Results as at 31 st December th February 2015

Transcription

1 The UBI Banca Group Consolidated Results as at 31 st December th February 2015

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 February 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 The Group s solid capital strength is confirmed: Common Equity Tier 1 ratio phased in as at 31 st December 2014: 12.33% following update of risk parameters (13% as at 30/09/2014) Pro forma Common Equity Tier 1 ratio fully loaded estimate of 11.5% (12% as at 30/09/2014) Basel 3 leverage ratio: phased in at 5.78%, fully loaded of 5.42% ( ) PROPOSED DIVIDEND PER SHARE FY12 FY13 FY14 Cash dividend always paid through the crisis Growth in core revenues and operating income in 2014 compared with 2013 Consolidated profit net of non-recurring items of mln/, up 46.2% compared with mln/ in 2013 Consolidated results (stated) Operating income of 3,409.6 mln/ (-0.8% YoY) Net interest income of 1,818.4 mln/ (+3.9% YoY) Net fee and commission income of 1,226.6 mln/ (+3.3% YoY) Finance result of mln/ (324.6 mln/ in 2013) Constantly lower operating expenses down to 2,108.2 mln/ (-1.6%) - 6 th consecutive year of reduced costs Net operating income of 1,301.4 mln/ (+0.5%) Annualised loan loss rate of 108 bps or 929 mln/ inclusive of the results of the AQR (107 bps or 943 mln/ in 2013) New inflows from performing loans to deteriorated status down significantly by 36.2% vs 2013 Profit on continuing operations before tax of mln/ (+57.4%) A consolidated loss for the Group of mln/ compared with a profit of mln/ in 2013, following approximately 883 mln/ of net impairment losses on goodwill and intangible assets (no impact on real profitability, +32bps of CET1 following booking of deferred taxes in income statement on fiscally recognised goodwill, lower PPA (-6 mln/ ) starting from 2015) Approximately 80% of the redundancies planned under the Framework Agreement signed with trade unions on 26 th Nov 14 (a total of 500 workers) were complete as at 31 st Jan 15 Loans at 85.6 bln/, up 0.8% compared with Sept 14 Positive trend confirmed in Jan 15 Direct funding at 93.2 bln/, up 6.1% compared with Sept 14 3

4 Strength of capital ratios affirmed -67 bps due among other to: Risk parameters (PD and LGD) update (-) Repurchase of minorities in BPCI, BPA, Carime (-) CET 1 phased -in 13.00% Reduction in equity investments (also disposal of insurance companies) (+) Deferred tax recognised in income statement following impairment (+) Etc... CET 1 phased -in 12.33% CET 1 Fully loaded 11.5% TOTAL CAPITAL RATIO phasedin 15.29%* Sept 14 Dec 14 Dec 14 Dec 14 * Following very recent more restrictive interpretation of rules by authorities, a subordinated loan amounting to 926 mln/ was excluded from calculation of Tier 2 affecting TCR by 150 bps 4

5 Lending: encouraging evidences from the end of October 2014 TOTAL GROSS LENDING EVOLUTION ( mln, end date) Total Performing Loans 78,175 78,348 77,550 77,214 78,311 Turn around point end -October 2014 (before TLTRO) 76,618 76,837 76,179 75,926 75,098 75,129 Trend confirmed in January 2015 TLTRO taken in Dec 14: ~ 3.2 bln/ As at 6 th February 15: Financing requests received: 3.7 bln/ Loans either granted or disbursed: 2.3 bln/ Total Deteriorated Loans 12,577 12,659 12,650 12,729 12,788 12,955 12,972 13,089 13,224 13,164 13,049 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 5

6 Significant improvement in new inflows in 4Q14, replacement rate 112% in Network Banks, 64% in Product Companies FOCUS ON MEDIUM / LONG TERM LENDING (~73% of TOTAL LENDING) NETWORK BANKS 44.7 bln/ (44.4 bln/ in Sept 14) New origination Reimbursement 105% 97% 88% 2014 = 82% 86% 82% % 91% FY14 = 101% FY13 = 86% 1Q 2Q 3Q 4Q New origination TOTAL STOCK * PRODUCT COMPANIES 48% in FY14 (vs 38% in FY13) ~62.4 bln/ = 11.3 bln/ (~62.5 bln/ in Sept 14) 64% in 4Q14 (vs 41% in 4Q13) (11.6 bln/ in Sept 14) Reimbursement PORTFOLIO IN RUN OFF 6.4bln/ (6.5 bln/ in Sept 14) Portfolio in run off: 6.5 bln/ end Sept 14, 6.9 bln/ end Dec 13, mainly former Banca 24/7 and Leasing * As at 31 Dec 2014, including NPLs, management accounts 6

7 4Q/3Q14: Direct funding +6.1% and Total Funding +3.1% Good performance in current accounts (+3.5%) and AUM (+2.4%) IAS amounts in bln Dec '13 Sept '14 Dec '14 quarterly % changes Loan to Deposit ratio 91.9% DIRECT FUNDING FROM ORDINARY CUSTOMERS % Current accounts and deposits % ~80% of total direct funding Current accounts & deposits up QoQ and YoY Term deposits, other payables and repos % Securities in issue: Network banks + UBI % Extra-captive customers* % Other (mainly customer CDs) % DIRECT FUNDING FROM INSTITUTIONAL CUSTOMERS % Covered Bonds % EMTN % CD and ECP % Retail bonds: lower rates imply a shift towards current accounts (more liquid) or AUM (more profitable) ~20% of total direct funding 1 bln/ 10Y Covered Bond issuance in Nov 2014 at a spread of 30 bps above the 10y midswap rate Preferred shares n.s Repos with CCG n.s. TOTAL DIRECT FUNDING % AUM % Bancassurance % AUC % Mutual funds stocks up by around 3.6 bln/ YoY In the period Dec 14-Feb 15 SICAV subscribed for ~912.5 mln/ that will be booked in 1Q15 volumes TOTAL INDIRECT FUNDING % TOTAL FUNDING % * Bonds placed on third party banks networks 7

8 Both retail and institutional bonds placed at significantly lower spreads RETAIL BONDS: NEW ISSUANCES RETAIL BONDS: Maturity Profile (Nominal amounts in bln, net of bond repurchases) Decreasing spreads vs. 6M Euribor (bps) Matured FY FY12 FY13 1Q14 2Q14 3Q14 4Q14 FY and following CDS 5Y SENIOR : UBI vs ITALY bps UBI INSTITUTIONAL BONDS: Maturity Profile EMTN COVERED BONDS* (Nominal amounts in bln) Source: Datastream ITALY 0 31-Oct Oct Oct Oct Oct Oct Oct Matured FY FY and following * Inclusive of original 0.5 bln/ of private placement with BEI expiring within Further 2.4 bln/ retained issue not included 8

9 The Italian Govies portfolio: after 4Q14 significant maturities, replaced with lower yield bonds, no relevant maturities are expected in 2015 (IAS value, bln) TOTAL* ITALIAN GOVIES: ~ 93% OF FINANCIAL ASSETS HTM HFT AFS Sept '14 Dec '14 (market values, bln) Modified duration of Italian Govies portfolio: 1.2 years ITALIAN GOVIES MATURITY PROFILE HTM HFT AFS Matured Q Over June '14 Sept '14 * In terms of nominal value, Dec 14 vs. Sept 14: +0.4 bln/ 9

10 Total eligible assets: nearly 30 bln/, of which 14 unencumbered Use of eligible assets ( bln) Data as at 30 th January 2015 ITALIAN GOVIES: ~ 73% OF ELIGLIBLE ASSETS Unencumbered Pledged for TLTRO/LTROs** ~32% of short term deposits 9% 6% CCG Repos 7.4 Eligible Assets: 29.8 bln/ (net of haircut) Data as at 30 th January % 73% Italian Govies Retained securitisations Retained covered bonds* Other (ABACO) TLTRO/LTROs Data as at 30 th January 2015 Outstanding** bln/ TLTRO 5 bln/ LTROs expiring on 26 Feb 15 LIQUIDITY RATIOS (as at 31 Dec 14) Loan to Deposit ratio = 91.9% NSFR and LCR >1 (even in the presence of an ordinary funding structure not based on TLTRO/LTROs support) LTROs Reimbursed bln/ on 8 Oct 14 3 bln/ on 12 Nov 14 1 bln/ on 17 Dec 14 2 bln/ on 29 Jan 15 * 2.1 bln/ on the 15 bln/ Retail Mortgages CB Programme, 1.6 bln/ on the 5 bln/ Commercial Mortgages CB Programme (net of haircut) ** Amounts include interest accrued 10

11 Pre-tax Profit: 449 mln/ in FY14 vs. 285 mln/ in FY13 Normalised Net Profit: 147 mln/ in FY14 vs. 100 mln/ in FY13 MAIN INCOME STATEMENT ITEMS Figures in mln FY13 FY14 % change 4Q13 3Q14 4Q14 % change 4Q14 vs 4Q13 % change 4Q14 vs 3Q14 Net interest income 1,751 1, % (3.8%) (5.5%) Net commission income 1,187 1, % % 6.7% Net result from finance (38.5%) (68.5%) 254.7% Other income items (5.6%) % 2.1% Operating income 3,437 3,410 (0.8%) (10.4%) 3.7% Staff costs (1,302) (1,302) 0.0% (327) (329) (325) (0.7%) (1.1%) Other administrative expenses (660) (635) (3.8%) (166) (147) (177) 6.5% 20.2% Net impairment losses on property, equipment and investment property and intangible assets (180) (171) (4.9%) (45) (42) (44) (3.2%) 2.9% Operating expenses (2,142) (2,108) (1.6%) (538) (518) (546) 1.3% 5.3% Net operating income 1,295 1, % (25.7%) 1.0% Net impairment losses on loans (943) (929) (1.5%) (366) (197) (302) (17.4%) 53.5% Net impairment losses on other financial assets and liabilities (48) (9) (81.8%) (25) (0) (6) (74.7%) n.s. Net provisions for risks and charges (12) (9) (26.7%) 2 (1) (5) n.s. n.s. Profits (losses) from disposal of equity investments (7) 94 n.s. (8) 0 94 n.s. n.s. Pre-tax profit from continuing operations % % (17.3%) Taxes on income for the period from continuing operations 55 (187) n.s. 205 (52) 1 n.s. n.s. Profits for the period attributable to non-controlling interests (26) (29) 11.7% (8) (9) (4) (47.5%) (56.7%) Profit/loss for the period 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) (25.9%) (72.7%) (17.3%) (38) (883) n.s. (38) (883) n.s. n.s. (26) (76) n.s. (26) (76) 193.7% n.s. Profit for the period n.s (876) n.s. n.s. Profit for the period NET OF NON-RECURRING ITEMS % n.s. n.s. See annex 7 for detail on non-recurring items Taxes on income included (all effects in 4Q): 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 PPA allocated line by line 11

12 Net Interest Income: +3.9% YoY. 4Q14 affected by lower avg. lending volumes, large amount of Italian Govies maturities and one-off item Yearly evolution FY14 vs. FY13: differential contribution ( mln) ( mln) 1,751 1, % 1, ,818 FY13 FY14 NII in FY13 Change in avg. Volumes Lending Funding Financial One-Off* NII activities In FY bln -1.5 bln +1.3 bln Quarterly evolution 4Q14 vs. 3Q14: differential contribution ( mln) ( mln) 468 Jan 15 improvement in volumes and spreads vs Dec Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 NII in 3Q14 Change in avg. Volumes Lending Funding Financial One-Off* NII activities In 4Q14-1 bln +0.3 bln +1 bln * One off booked at the end of the year, following the introduction of a new methodology for the accounting of interest on claims in Prestitalia 12

13 Growth of Net Interest Income from business with customers thanks to widening of customer spread (+19 bps) and notwithstanding lower avg. lending volumes NII from BUSINESS FY13 FY14 with CUSTOMERS ( mln) 1,405 1,434 Including a negative oneoff** component for -5 mln/ See annex 8 for details Pricing (average bps on stocks*) Average interestbearing volumes ( bln) Mark-up Customer Spread (UBI Banca Group) Mark-down Euribor 1M Lending Funding 84 FY FY14 ~ 80% of NII generated by business with customers good improvement in customer spread YoY: Better markdown related to lower cost of funding Stable mark up thanks to substitution of expiring loans at higher spreads NII from FINANCIAL ASSETS & INTERBANK EXPOSURE ( mln) Financial asset average volumes ( bln) FY13 FY FY13 FY14 Net yield on financial portfolio: improvement due to lower associated funding costs *Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI) **see note on previous page 13

14 4Q/3Q14: Net Interest Income from business with customers affected by competition and lower market rates. Lower contribution from financial assets following expiry of 4.9 bln/ of IT govies (25% of the whole portfolio) NII from BUSINESS 3Q14 4Q14 with CUSTOMERS ( mln) Including a negative oneoff component** for -5 mln/ See annex 8 for details Pricing (average bps on stocks*) Average interestbearing volumes ( bln) Mark-up Customer Spread (UBI Banca Group) Mark-down Euribor 1M 7 1 Lending Funding Q14 4Q14 4Q14 vs. 3Q14 stable customer spread: decrease in markup in 4Q14 mainly due to strong competition in s/t lending in the first part of the quarter (-12 bps s/t mark up) better markdown mainly due to lower cost of medium-long term funding NII from FINANCIAL ASSETS & INTERBANK EXPOSURE ( mln) Financial asset average volumes ( bln) 3Q14 4Q Q14 4Q14 Net yield on financial portfolio: interest income lower in 4Q, due to large amount (4.9 bln/ ) of Italian Govies matured in 4Q14 and bought in FY11 *Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI) **see note on page 13 14

15 Focus on moving parts of NII LENDING FUNDING Long term loans: ~62.4 bln/ ~7 bln/ expiring every year...of which ~6.3 bln/...of which ~0.5/0.6 bln/ New loans at higher spreads substituting expiring loans. Annual change in avg. spread: +70 bps Substitution rate ~101% in network banks* Run-off of a higher priced portfolio (third parties lending). No replacement nor repricing Retail bonds: ~23.6 bln/ Expected recomposition of retail bonds funding vs. deposits or AuM Institutional bonds: ~13.7 bln/ Yearly 1/3 of the stock expires, replaced now at ~60 bps vs. 6M EUR (150 bps in FY12 and 126 bps in FY13) Opportunistic recourse to Covered Bond, EMTN, Lower Tier 2... Short term loans: ~23.3 bln/ Spreads on new loans now affected by competition Deposits: ~47.1 bln/ Limited repricing still possible FINANCIAL ASSETS In 2015 expected stable portfolio (maturities 0.3 bln/ ), but: 4.9 bln/ (of which 3.1 bln/ HTM) expired from mid Nov 2014 replaced by lower yield bonds opportunistic sales given positive AFS reserve * See page 5 15

16 Net Commission Income: +3.3% YoY mainly thanks to good performance of securities-related business but also to careful management of assets See annex 9 for details Yearly evolution Detail of Net Commission Income - yearly evolution ( mln) +3.3% mln/ FY13 FY14 % change Guarantees (on State Guaranty Bonds) (47) (18) -60.5% All state guaranteed bonds reimbursed within August 2014* 1,187 1,227 FY13 FY14 Banking Services Commissions % Securities Management, Trading & Advisory Services** % Total Net Commission Income 1,187 1, % Trend affected by volumes of business Good performance thanks to better market conditions and good performance in AuM (+10.5% YoY). Still plenty of room to switch AuC to AuM, improving mix Quarterly evolution Detail of Net Commission Income - quarterly evolution ( mln) +6.7% mln/ 4Q13 3Q14 4Q14 4Q14 vs 4Q13 3Q14 Guarantees (on State Guaranty Bonds) (12) (3) - n.s. n.s. Banking Services Commissions % 7.0% Securities Management, Trading & Advisory Services** % 4.4% 4Q13 3Q14 4Q14 Total Net Commission Income % 6.7% * First reimbursement 3 bln/ value 7 th March 14 and remaining 3 bln/ value 7 th August 14 ** Includes FX negotiations. Performance fees: 17 mln/ in FY14 (14.2 mln/ in FY13) 16

17 AuM shows positive evolution both YoY and QoQ bln/ Dec '13 Sept '14 Dec '14 % change vs Dec '13 % change vs Sept '14 Indirect Funding Evolution AuM % 2.5% Bancassurance % 3.0% AuC % -4.0% Total Indirect Funding % -0.3% Dec 13 Sept 14 Dec 14 UBI Pramerica SGR AUM Composition 13% 10% 4% 56% 12% 5% 7% 51% 13% 5% 6% 51% 17% 25% 25% Bond Balanced Equity Flexible Cash 17

18 Cost evolution continues to be favourable (Stated amounts) Y E A R L Y mln/ FY13 FY14 % change Staff cost 1,302 1, % Other Admin. Expenses % D&A (including PPA*) % Total operating costs 2,142 2, % Q U A R T E R L Y mln/ 4Q14 4Q13 3Q14 % change % change Staff cost % % Other Admin. Expenses % % D&A (including PPA*) % % Total operating costs % % Detail of STAFF COSTS - yearly evolution Detail of OTHER ADMIN. EXPENSES - quarterly evolution 1, , , FY13 Previous National Labour Contract inertial increase Incentives, benefits, variable retribution, social hour and other Sale of BDG and closing of UBI Singapore Headcounts exit / substitution and relative retribution evolution FY14 4Q14 / 3Q14 increase mainly due to: usual seasonality +8.1 mln/ referring to new IT projects implementations relating to Digital Bank project, merger between IW Bank and UBI Private Investment, stabilisation and replacement of the Prestitalia IT system, interventions to support single European banking supervision regulations, a project to improve office automation tools, etc.). IT Projects expenses in 2014: 85.5 mln/ vs 75.3 mln/ in 2013 Cost control efforts to continue in * PPA effect amounted to 20 mln in FY13 and to approx. 21 mln in FY14 18

19 Confirmed strong track record in cost management (Amounts net of non-recurring items) TOTAL OPERATING COSTS ( mln, net of PPA) 2,599 2,142 2, % FY07 FY13 FY14 On 26 Nov 14 Framework Agreement signed with Trade Unions 500 staff reductions (o/w 80% already completed within Jan 15) and flexibility in working hours 4Q14 One-off cost: mln/ gross (76.3 mln/ net) Cost savings at regime: ~50 mln/ gross starting from 2015 helping to offset possible increases coming from New National Labour Contract STAFF COSTS 1,590 OTHER ADM. EXPENSES ( mln) ( mln, net of PPA) 1,302 1, = -4.0% FY07 FY13 FY14 FY07 FY13 FY14 STAFF HEADCOUNTS NUMBER OF DOMESTIC BRANCHES 21,700 1,970 1,725 18,337 1,670 18, % -3.2% 1st Apr '07 Dec '13 Dec '14 1st Apr '07 Dec '13 Dec '14 Note: staff headcounts at the end of the period 19

20 LLPs guidance delivered: 929 mln/ vs. 943 mln/ in FY13, including adjustments to enlarged AQR perimeter of 609 mln/ vs. 390 mln/ requested FY14 Cost of credit at 108 bps (107 bps in FY13) LOAN LOSS PROVISIONS ( mln) FY13 FY14 A Q R /mln AQR REQUEST UBI LLPs ON PORTFOLIO IN SCOPE Net analytical Impairments o/w writebacks Net collective impairments TOTAL IMPAIRMENTS P E R I M E T E R Analytical Provisioning o/w Credit File Review Perimeter o/w Projection of Findings Perimeter Collective Provisioning TOTAL PROVISIONING FY14 FY13 LOAN LOSS PROVISIONS ( mln) quarterly evolution Q 2Q 3Q 4Q Total FY Change % +26% +2% +2% -17% -1.5% Those provisions do not only concern positions subject to a specific request for an addition to them*, but also positions that did not require adjustments when the AQR was carried out, but which following events that occurred in 2014 were added to in compliance with internal policies Relating to the annual update of the risk parameters used in the advanced methods for calculating capital requirements. These parameters reflect the current recession phase of the business cycle because they are now: - updated to include trends observed up to the end of 2013; - calibrated over a historical period of full crisis (the last 7 years for the corporate segment and the last 5 years for the retail segment) * Carried out totally, partially or not at all in view of changes occurring in those positions during 2014 and of documentary evidence acquired 20

21 Stock of deteriorated loans stabilising in GROSS DETERIORATED LOAN STOCKS ( mln) NET DETERIORATED LOAN STOCKS ( mln) +0.2bln/ +0.4 bln/ +1.2 bln/ +1.7 bln/ 13,089 9,312 9,448 9, bln/ +1.8 bln/ 12,674 13,049 10,958 8,105 8, % +1.5% +0.6% +15.7% -0.3% 6, % +27.6% +29.1% Dec '11 Dec '12 Dec '13 Sept'14 Dec '14 Dec '11 Dec '12 Dec '13 Sep' 14 Dec '14 DISPOSALS OF HIGHLY PROVISIONED POSITIONS (NPLs) IN THE LAST 4 YEARS 2014: 304 mln/ * covered at ~85% 2013: 103 mln/ covered at ~93% 2012: 108 mln/ covered at ~96% 2011: 219 mln/ covered at ~98.5% COVERAGE Dec '13 Sept '14 Dec '14 Performing loans 0.61% 0.56% 0.63% Total deteriorated loans 26.5% 27.8% 27.1%..including write-offs 36.3% 37.8% 37.1% NPLs (sofferenze) 41.6% 40.5% 38.6%..including write-offs 56.0% 55.0% 53.4% Impaired loans (incagli) 15.1% 16.1% 16.3% Restructured loans 13.9% 16.7% 18.5% Past due loans 2.8% 4.5% 4.4% NPLs Dec 14 coverage affected by disposal, higher level of secured inflows and increase in stock write-offs Dec 14 pro-forma NPLs disposal 28.5% 38.7% 40.6% 55.2% * Of which 89 mln/ in 2Q14 and 215 mln/ in 4Q14 21

22 ...benefitting from lower inflows from performing loans... TOTAL INFLOWS FROM PERFORMING TO DETERIORATED LOANS ( /mln) 2,821 4,307 4, % 2,632 FY11 FY12 FY13 FY14...as a consequence of a better risk profile... PERFORMING LOAN PORTFOLIO*: RISK PROFILE High risk 5.5% vs 6.4% in Dec 13 Unrated 5.8% vs 5.7% in Dec 13 Medium Risk 17.7% vs 20.7% in Dec 13 Low Risk 71% vs 67.2% in Dec 13 December 2014 vs December 2013 * Perimeter: Network Banks + UBI Banca (essentially former Banca 24/7 activities) 22

23 Outlook In 2015 net interest income will be affected by a lower contribution from the securities portfolio, mainly as a result of positions that matured in the held-to-maturity portfolio in the last months of A recovery in volumes of business with customers should make it possible to increase net interest income from business with customers, even in the presence of strong competition on pricing, and help offset the lower contribution forecast from the securities portfolio Net fee and commission income should benefit from positive trends expected for assets under management and insurance and possible growth in fees and commissions associated with lending A further decrease in sovereign debt risk could allow positive results to be achieved for trading and hedging activity again in 2015 The recent trade union agreement will help compensate for the automatic increases in staff costs, the overall performance of which will in any case depend on the final outcome of the renewal of the national trade union contract The downwards trend for other administrative expenses is forecast to continue The slowdown in the pace of new defaulted loans recorded in 2014 is expected to continue in 2015 and could favour an improvement in loan losses compared with

24 Annexes 24

25 Main Reclassified Balance Sheet Items Annex 1 MAIN ASSETS ITEMS Figures in millions of euro % annual change % quarterly change Financial assets (AFS, HFT, FV, HTM) 21,841 22,617 23, % 5.0% Loans to customers 88,421 84,947 85, % 0.8% Property, equipment and investment property 1,798 1,741 1, % -0.7% Intangible assets 2,919 2,883 1, % -38.4% of which: goodwill* 2,512 2,512 1, % -41.7% Tax assets 2,833 2,567 2, % 16.5% Other assets % 19.7% Total assets 124, , , % 1.0% MAIN LIABILITIES AND EQUITY ITEMS Figures in millions of euro % annual change % quarterly change Net interbank position** 10,888 12,259 9, % -18.8% Due to customers 50,702 45,582 51, % 13.2% Securities issued 41,902 42,272 41, % -1.6% Tax liabilities % -13.9% Net worth attributable to the Parent 10,089 10,651 10, % -1.1% Non-controlling interests % -33.2% Profit for the period (726) n.s. n.s Total liabilities and equity 124, , , % 1.0% * Goodwill impairment in 2014 ** Including 3.2 bln TLTRO and 7 bln LTRO 25

26 Capital Ratios (Phased in, Basel 3) as at Dec 14: Common Equity Tier 1 Ratio at 12.33%, Total Capital Ratio at 15.29% Annex 2 mln/ Sept '14 Dec '14 Common Equity Tier 1 Capital (before filters and transitional provisions) 8, ,029.9 Transitional provisions (minority interest) Transitional provisions (AFS Reserves) Common Equity Tier 1 Capital filters Italian Govies filters Common Equity Tier 1 (after filters) Common Equity Tier 1 regulatory adjustments: negative elements for deduction excess of expected losses over impairment losses 8, , Common Equity Tier 1 Capital (CET1) 7, ,615.3 Additional Tier 1 before deductions Additional Tier 1 regulatory adjustments: negative elements for deduction excess of expected losses over impairment losses Additional Tier Tier 1 Capital 7, , % 12.33% Sept '14 Dec '14 Common Equity Tier % 15.29% Total Capital Ratio Dec 14 ratios: CET1 affected by update of risk parameters to end 2013 and benefits from DT release following impairment of goodwill TCR affected by a recent more restrictive interpretation given by Authorities on the qualifications for inclusion in the regulatory capital of subordinated liabilities issued after 31/12/2011, with an amortisation schedule which starts to run before five years since issuance, which are totally excluded from the calculation of own funds. The UBI Group has issued one single subordinated bond for approximately 926 mln/ with an impact of 150 bps on the total capital ratio Tier 2 Capital before transitional provisions 3, ,187.8 Tier 2 instruments grandfathering Tier 2 Capital after transitional provisions 3, ,187.8 Tier 2 capital regulatory adjustments of which: negative elements for deduction excess of expected losses over impairment losses Tier 2 Capital 3, ,826.3 TOTAL OWN FUNDS 10, ,441.6 mln/ Sept '14 Dec '14 Risk weighted assets 59, ,762.6 Total prudential requirements Credit risk 4, ,572.7 CVA (Credit Value Adjustment) risk Market risk Operational risk

27 Total Lending up by 0.8% vs Sept 14 Annex 3 bln, end date 31 Dec '13 30 Sept '14 31 Dec '14 changes vs Dec '13 changes vs Sept '14 Retail % -1.0% of which: Private Customers % 0.1% Small business % -1.3% UBI Banca (former Banca 24/7)* % -2.5% Prestitalia % -6.8% Corporate % 0.6% of which: Core corporate % -0.1% Large corporate % 3.5% UBI Banca (former Centrobanca) % -1.9% Private Other** % 5.7% % 6.4% of which: UBI Leasing % -1.4% UBI Factor % 1.4% UBI Banca*** % n.s. Total lending % 0.8% Small business: turnover up to 15 mln Core Corporate: turnover from 15 to 250 mln Large Corporate: turnover > 250 mln * 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 *** Repos with CCG for the investment of liquidity made by UBI Banca and higher margins on liability repos 27

28 Asset Quality Details Annex 4 LOANS TO CUSTOMERS - AS AT 31 DECEMBER 2014 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln CARRYING AMOUNT mln %* COVERAGE RATIO % NPLs (Sofferenze) 6, % 2,527 IMPAIRED LOANS (Incagli) 5, % 827 RESTRUCTURED LOANS % 163 PAST DUE % 24 4, % 38.56% 4, % 16.33% % 18.51% % 4.39% TOTAL DETERIORATED LOANS 13, % 3,541 9, % 27.13% TOTAL PERFORMING LOANS 76, % , % 0.63% TOTAL LOANS TO CUSTOMERS 89, % 4,023 85, % 4.49% LOANS TO CUSTOMERS - AS AT 30 SEPTEMBER 2014 GROSS EXPOSURE mln %* IMPAIRMENT LOSSES mln CARRYING AMOUNT mln %* COVERAGE RATIO % NPLs (Sofferenze) 6, % 2,665 IMPAIRED LOANS (Incagli) 4, % 799 RESTRUCTURED LOANS % 146 PAST DUE % 30 3, % 40.53% 4, % 16.11% % 16.73% % 4.49% TOTAL DETERIORATED LOANS 13, % 3,640 9, % 27.82% TOTAL PERFORMING LOANS 75, % , % 0.56% TOTAL LOANS TO CUSTOMERS 89, % 4,069 84, % 4.57% * As a percentage of total loans 28

29 Other key elements to assess the Group loan portfolio Annex 5 December 2014 Loan To Value* (Network banks + UBI): Performing loans: Retail: 45.6% (44.8% in Dec 13) Corporate: 39.8% (42.1% in Dec 13) Impaired Loans: Retail: 55.6% (57.8% in Dec 13) Corporate: 49.4% (51.9% in Dec 13) % of Collateralised (real estate) Positions*: Total portfolio: > 60% (of which NPLs and Impaired > 65%) * Arithmetic mean 29

30 Securities Portfolio Composition* Annex 6 Composition of the portfolio BY TYPE OF FINANCIAL INSTRUMENT Government bonds 93.3% 94.8% 95.6% Corporate bonds (mainly bank issues) 4.6% 4.4% 3.3% Hedge funds 0.6% 0.6% 0.5% Funds and shares 1.5% 0.3% 0.6% BY FINANCIAL PROFILE Floating rate** 20.4% 52.1% 57.9% Fixed rate 74.5% 44.1% 38.2% Structured securities 3.0% 3.0% 2.8% Shares, funds, convertible bonds 2.2% 0.9% 1.1% BY CURRENCY Securities in euro 99.7% 99.7% 99.7% BY GEOGRAPHICAL DISTRIBUTION Securites of the euro area 99.6% 99.7% 99.9% USA securities 0.0% 0.00% 0.00% BY RATINGS (BONDS) Investment grade 99.1% 98.7% 99.4% Average rating Baa2 Baa2 Baa2 * Analysis refers to a portfolio which excludes participations, some smaller portfolios and derivatives. Management accounts, positions determined on trade date ** Fixed rate securities with asset swaps are considered as floating rate securities; securities in asset swap represent 97% of floating rate securities as at 31 st December

31 FY13 and FY14 P&L non-recurring items: detail Post tax contribution of non-recurring items to net profit of the period (in mln) Annex 7 FY13 FY14 Net stated profit Net stated profit (725.8) Recognition of IRAP* DTA on tax relief on goodwill Disposal of equity stakes 92.5 Disposal of equity stakes Profit on Bank of Italy stake Profit on the repurchase of financial liabilities (subordinated EMTN) Profit on the disposal of real estate properties 6.5 Net impairment losses on tangible and intangible assets (37.7) Net impairment losses on tangible and intangible assets (882.7) Modification of 2013 IRES** tax rate (37.5) Leaving incentives (76.3) Leaving incentives Net impairment losses on AFS financial assets Intervention by the Interbank Deposit Protection Fund (26.0) (20.7) (11.4) Net impairment losses on AFS financial assets (4.4) Change in the substitute tax on the valuation of profit participation stakes in the Bank of Italy IT write off (3.8) (2.6) Integration costs BPI-IW Bank (1.0) Intervention by the Interbank Deposit Protection Fund (0.4) Net profit excluding non-recurring items Net profit excluding non-recurring items * IRAP = regional production tax ** IRES = corporate income tax 31

32 Net Interest Income - Customer Spread Details Annex 8 CUSTOMER SPREADS in bps on avg. STOCK* 1Q14 2Q14 3Q14 4Q14 1M Euribor Mark up vs 1M Euribor Short term Medium-long term Mark down vs 1M Euribor Sight deposits Term deposits Retail bonds Institutional bonds UBI Group - Customer spread of which UBI Network Banks cust. spread * Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI), unless otherwise stated 1Q14 and 2Q14 values restated for consistency 32

33 Net Commission Income Details Annex 9 Net Commission Income ( mln) FY13 FY14 % FY14 vs. FY13 Guarantees (on State guaranty b onds) (46.5) (18.4) -60.5% BANKING RELATED COMMISSIONS % of which: Guarantees (b anking 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, , % * Includes FX negotiations 33

34 An impressive cost management story strongly committed to efficiency (Amounts net of non-recurring items) Annex 10 TOTAL OPERATING COSTS -19.0% FY14 vs. FY07 1,294 1,305 1,316 1,287 1,244 1,228 1,222 1,209 1,216 1,198 ( mln, net of PPA) 1,137 1,128 1,072 1,070 1,044 1,060 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H STAFF COSTS OTHER ADM. EXPENSES ( mln) FY14 vs. FY07 ( mln, net of PPA) FY14 vs. FY % -17.2% H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H STAFF HEADCOUNTS -16.4% NUMBER OF DOMESTIC BRANCHES December 2014 vs. April 2007 December 2014 vs. April % 21,700 21,55020,680 20,926 20,285 20,260 19,699 19,546 19,407 19,306 19,088 18,485 18,337 18,438 18,132 1,970 1,929 1,944 1,939 1,955 1,884 1,892 1,877 1,875 1,801 1,727 1,726 1,725 1,673 1,670 Apr June Dec June Dec June Dec June Dec June Dec June Dec June Dec Apr June Dec June Dec June Dec June Dec June Dec June Dec June Dec Note: staff headcounts at the end of the period 34