1. finance

The UBI Banca Group
Consolidated Results as at 30th September 2014
12th November 2014
Disclaimer
This document has been prepared by Unione di Banche Italiane Scpa ("UBI") for informational purposes only and for use in the presentation of
November 2014. 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
Executive Summary


CAPITAL



CET 1 phased in at 13%, the highest level in UBI Banca’s history
TCR phased in at 18.01%
CET1 fully loaded at 12% (11.2% taking into consideration 4Q updating of risk
parameters and announced transactions - Aviva and UBI Assicurazioni disposals
LEVERAGE ratio (Basel 3)*: phased in at 5.9% and fully loaded at 5.4%
COMPREHENSIVE ASSESSMENT: Capital surplus of €1.743 billion
Highest CET1 after AQR in Italy: 11.82%


LIQUIDITY


P&L
As at 12th November 2014, € 4 billion LTRO reimbursed (out of € 12 billion)
LCR and NSFR > 1 also net of LTRO
Loan to Deposit ratio: 96.7%
TLTRO to be taken in Dec 2014: approx. € 3 billion euro

Net Interest Income: +3% 3Q14 vs 2Q14, the best quarter in the last 2 years

Encouraging results from LLPs: -14.5% 3Q14 vs. 2Q14
FY14 guidance confirmed and asset quality improving (-37.2% YoY new inflows
from performing loans to deteriorated loans)
Data as at Sept 2014, unless otherwise stated
* According to Basel 3 definition of Leverage Ratio, the B3 tier one capital must be equal to at least 3% of on- and off-balance-sheet assets
3
UBI Banca solid capital position confirmed by the CA and by actual ratios
COMPREHENSIVE ASSESSMENT
UBI Banca is well positioned, in terms of CET1, both in Italy and even in Europe*...
UBI AQR impact:
UBI
Italy
SSM*
CET 1
as at 1st Jan 2014
12.25%
10.17%
11.77%
AQR adjusted
CET 1
11.82%
9.47%
11.35%
CET 1 after
adverse scenario
8.20%
6.14%
8.37%
•
•
•
•
-44 bps
Credit file review
Projection of findings
Collective provisioning
RWA adjustment
-21
-18
-2
-3
UBI Adv. Scenario impact: -362 bps
Capital excess after AQR
and adverse stress test
• stress effect
• phase-in
• join-up
-270
-80
-12
+ 1.7
bln/€
ACTUAL (AS AT 30 SEPT ‘14)
CET 1 phased in
CET 1 fully loaded in 2018
CET 1 fully loaded in 2018
Regulatory Basel 3 ratio
Pro-forma calculated as at Sept ’14
Management figure at regime
12.7%
13.0%
Including
profit
June '14
Sept '14
Transitional
adjustments
(shortfall, minorities,
AFS reserve...)
12.0%
Sept '14
Transitional
adjustments
+
prudential approach
to credit parameters
+
estimates of the JV
Aviva and JV UBI
Assic. transactions
11.2%
Sept '14
* SSM: Europe including Italy, official ECB and EBA data
4
Improving profitability and cost control capacity confirmed
9M13
9M14
% change
1,291
1,376
+6.6%
NET COMMISSION INCOME
888
908
+2.3%
NET RESULTS FROM FINANCE
168
151
-10.7%
9M13
9M14
% change
STAFF COSTS
974
977
+0.2%
OTHER ADMINISTRATIVE EXPENSES
494
458
-7.2%
D&A
135
128
-5.4%
OPERATING INCOME
NET INTEREST INCOME
2,558
2,486
+2.9%
9M13
9M14
Notwithstanding loans down by
3.9% vs. Dec ‘13
OPERATING EXPENSES
1,603
1,563
-2.5%
9M13
9M14
+12.7% YoY
9M14
Net operating
Income
995 ml/€
+34.3% YoY
9M14
Pre tax profit
362 mln/€
+47% YoY
9M14
Net Profit
150 mln/€
+136.3% YoY
9M14
Net Profit excl. non
recurring items
175 mln/€
(€ mln)
5
Weak demand and defence of margins drive lending trend
€ bln
30 Sept '13
Retail
o f which:
% Qo Q
31 Dec '13 30 June '14 30 Sept '14 c ha nge s
1
Favouring medium/long term lending
44.5
44.0
43.3
42.8
-1.2%
Private Customers
21.2
21.2
21.2
21.2
-0.3%
Medium/long term
Small business
14.6
14.4
14.2
14.0
-1.1%
Short term
62
6.2
60
6.0
57
5.7
55
5.5
-3.0%
3 0%
2.5
2.4
2.2
2.1
-6.1%
UBI Banca (fo
(f rmer B anca 24/7)
1
Prestitalia 2
72.6%
73.6%
27.4%
26.4%
June '14 Sept' 14
Corporate
o f which:
Core corporate
Large corporate
UBI Banca (fo rmer Centro banca)
Private
Other
o f which:
UBI Leasing
UBI Factor
UBI Banca 3
Total lending
Small business: turnover up to €15 mln
Core Corporate: turnover from €15 to €250 mln
Large Corporate: turnover > €250 mln
1
2
3
28.6
28.0
27.9
27.0
-3.4%
14.9
14
9
8.2
5.6
14.6
14
6
8.1
5.3
14.6
14
6
8.3
5.1
14.1
14
1
7.8
5.0
-2 9%
-2.9%
0.7
0.7
0.7
0.7
-1.9%
16.0
15.7
15.2
14.5
-4.5%
7.6
2.2
1.6
7.4
2.3
1.4
7.2
2.0
1.0
7.0
2.0
0.7
-2.4%
-30.7%
89.8
88.4
87.1
84.9
-2.5%
-5.6%
2
Defence of margins
Mark up 3Q14 vs 2Q14: +9 bps
3
Medium/long term new origination
vs. reimbursement:
+100 bps on average of delta spread
on banking
gp
perimeter and +150 bps
p on
leasing contracts
-1.6%
-2.6%
Net of repos with CCG for
the investment of liquidity
made by UBI and of
portfolio run off,
(altogether 0.6 bln/€)
QoQ change is -1.9%
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
MLT lending origination reflects GDP weakness (2014E -0.4%* vs. 2013 -1.9%)
Significant improvement in new inflows YoY but not enough for growth
FOCUS ON MEDIUM / LONG TERM LENDING
(~74% of TOTAL LENDING)
STOCK **
~62.5 bln/€
NETWORK
BANKS:
~ 44.4 bln€
95%
=
82%
1Q
9M14 = 95%
82%
2Q
9M13 = 83%
3Q
New origination
=
STOCK IN
RUN-OFF
~6.5 bln/€
85%
2013
~ 44.5 bln/€
in June ‘14
~ 12.0 bln/€
in June ‘14
87%
New origination
Reimbursement
PRODUCT
COMPANIES
~ 11.6 bln/€
104%
2014
42%
in 9M14 (vs 37% in 9M13)
Reimbursement
Portfolio in run off: 6.5 bln/€ end Sept ‘14, 6.9 bln/€ end Dec ‘13,
mainly former Banca 24/7 and Leasing
~ 6.7 bln/€
in June ‘14
*
**
EU Commission estimate as at 4th November 2014
As at 30 Sept 2014, including NPLs, management accounts
7
Solid “core funding” (current accounts + retail bonds: +0.7%
performance in total indirect funding (+3.4% 3Q vs 2Q14 )
3Q vs 2Q14)
and good
Loan to Deposit ratio
IAS amounts in € bln
DIRECT FUNDING FROM
ORDINARY CUSTOMERS
Sept '13
Dec '13
June '14 Sept '14
quarterly
% changes
75.3
74.7
74.0
74.0
Current accounts & deposits (other than CCG)
42.6
42.6
42.5
42.8
0.8%
Term deposits, other payables and repos
3.1
2.6
2.4
2.0
-14.4%
Securities in issue:
Network b anks + UBI
Extra-captive customers*
Other (mainly customer CDs)
23.8
3.8
2.0
24.1
3.7
1.7
24.4
3.4
1.3
24.6
3.3
1.3
0.6%
-3.5%
-1.5%
17.5
17.9
16.2
13.9
-14.3%
Covered Bonds
EMTN
CD and ECP
Preferred shares
6.3
5.1
0.3
0.3
7.7
4.2
0.2
0.3
8.8
4.3
0.8
0.0
8.9
3.6
0.7
0.0
0.7%
-15.4%
-22.9%
n.s.
Repos with CCG
5.5
5.5
2.3
0.7
-67.8%
TOTAL DIRECT FUNDING
92.8
92.6
90.2
87.9
-2.6%
AUM
Bancassurance
AUC
27.8
11.6
30.7
27.8
11.7
32.1
28.7
12.1
32.9
30.0
12.2
33.9
4.7%
1.2%
3.0%
TOTAL INDIRECT FUNDING
70.1
71.7
73.7
76.1
3.4%
TOTAL DIRECT + INDIRECT FUNDING
162.9
164.3
163.8
164.0
0.1%
DIRECT FUNDING FROM
INSTITUTIONAL CUSTOMERS
0.0%
96.7%
~80% of total direct funding
 Current accounts & deposits slightly up QoQ
 Retail bonds slightly up QoQ; strong placement power
confirmed
~20% of total direct funding
 €1 billion 10Y Covered Bond issuance effected in Nov
2014 at a spread of 30 bps
 Low recourse to Repos with CCG due to strong liquidity
position
 Total Direct Funding: -0.9% QoQ (i.e. € 0.8 bln) excluding
Repos with CCG
 Among AuM, mutual funds and SICAV stocks up by
around € 3 billion (+14.7%) Sept ‘14 vs. Sept ‘13
* Bonds placed on third party banks networks
8
Both retail and institutional bonds placed at significantly lower spreads
RETAIL BONDS: Maturity Profile
RETAIL BONDS: NEW ISSUANCES
(Nominal amounts in € bln, net of bond repurchases)
In 9M14, replacement rate: > 100%
2014
Decreasing spreads vs. 6M Euribor (bps)
150
FY12
126
FY13
110
1Q14
102
2Q14
84
61
3Q14 Oct '14
INSTITUTIONAL BONDS: NEW ISSUANCES IN 9M14
COVERED BOND
EMTN
COVERED BOND
Date
Jan ‘14
Feb ’14
Nov ‘14
Amount
€ 1 bln
€ 1 bln
€ 1 bln
Maturity
10 Y
5Y
10 Y
Coupon
3.125%
2.875%
1.25%
Matured
2.00
9M14
4Q14
70%
55%
65%
DOMESTIC
30%
45%
35%
6.84
2.44
2015
2016
INSTITUTIONAL BONDS: Maturity Profile
2017
2018 and
following
(Nominal amounts in € bln)
COVERED BONDS*
EMTN
1.00
Nov’14
issue
2014
Matured
0.55
0.03
Subscribers
FOREIGN
9.01
7.28
6.45
1.05
1.05
1.80
1.60
0.03
0.48
0.97
9M14
4Q14
2015 2016 2017 2018 2019
0.80 0.05 1.00
0.16
0.10
3.61
0.03
2020 and
following
* Inclusive of 0.5 bln/€ of private placement with BEI expiring within 2022. Further 2.4 bln/€ retained issue not included
9
Low lending demand implies maintenance of Govies portfolio to sustain NII
and at the same time contributing to total eligible assets
ITALIAN GOVIES: ~ 91% OF FINANCIAL ASSETS
(€ bln)
ITALIAN GOVIES MATURITY PROFILE
(market values, € bln)
TOTAL
HTM
HFT
AFS
20.3
20.7
3.1
1.7
3.1
0.4
15.6
17.2
June '14
Modified duration of Italian
Govies portfolio: 0.5 years
Total 4Q14 maturing Govies to be
replaced in an opportunistic way
AFS Reserve on
Italian Govies:
+144 mln/€ as at
30th Sept 2014
HTM
HFT
AFS
0.4
3.1
2.2
6.9
1.8
4Q14
Sept '14
6.3
2015-16 2017-18
Over
ITALIAN GOVIES: ~ 71% OF ELIGLIBLE ASSETS
Use of eligible assets** (€ bln)
10%
13%
Eligible Assets:
30.1 bln/€
(net of haircut)
Data as at 31st October 2014
6%
Data as at 31st October 2014
71%
Italian Govies
Retained securitisations*
Retained covered bonds
Other (ABACO)
Unencumbered
14.7
Pledged for LTROs***
11.3
CCG Repos
4.1
* 2.1 bln/€ on the 15 bln/€ Retail Mortgages CB Programme, 1.7 bln/€ on the 5 bln/€ Commercial Mortgages CB Programme (net of haircut)
** 4 bln/€ of LTRO reimbursed up to 12th November, 8 bln/€ left of which 2 expiring in Jan ’15 and 6 expiring in Feb ‘15
*** 11 bln/€ LTRO + interest accrued. 3 bln/€ LTRO subsequently reimbursed with value date 12th Nov 2014
~34% of short
term deposits
10
Stated Net Profit: 150 mln/€ in 9M14 vs. 102 mln/€ in 9M13
MAIN INCOME STATEMENT ITEMS
Figures in € mln
Net interest income
Net commission income
9M13
9M14
% change
3Q13
2Q14
3Q14
% change
3Q14 vs 3Q13
% change
3Q14 vs 2Q14
1,291
1,376
6.6%
446
454
468
4.9%
3.0%
888
908
2.3%
286
310
299
4.4%
(3.6%)
Net result from finance
168
151
(10.7%)
59
74
14
(76.5%)
(81.3%)
Other income items
138
123
(11.3%)
43
45
42
(3.6%)
(7.2%)
Operating income
2,486
2,558
2.9%
834
882
822
(1.5%)
(6.9%)
Staff costs
(974)
(977)
0.2%
(328)
(322)
(329)
0.2%
2.1%
Other administrative expenses
(494)
(458)
(7.2%)
(159)
(159)
(147)
(7.3%)
(7.3%)
Net impairment losses on property, equipment and investment
property and intangible assets
(135)
(128)
(5.4%)
(45)
(43)
(42)
(4.8%)
(0.4%)
(1,603)
(1,563)
(2.5%)
(532)
(523)
(518)
(2.5%)
(0.9%)
883
995
12.7%
303
359
303
0.3%
(15.6%)
Operating expenses
Net operating income
Net impairment losses on loans
(577)
(626)
8.6%
(193)
(230)
(197)
2.2%
(14.5%)
Net impairment losses on other financial assets and liabilities
(22)
(2)
(89.8%)
(5)
(4)
(0)
n.s.
n.s.
Net provisions for risks and charges
(14)
(4)
(72.4%)
(3)
7
(1)
n.s.
n.s.
0
(0)
n.s.
(1)
0
0
n.s.
n.s.
270
362
34.3%
101
133
105
3.7%
(21.0%)
Taxes on income for the period from continuing operations
(150)
(187)
25.4%
(46)
(77)
(52)
12.1%
(32.0%)
Profits for the period attributable to non-controlling interests
(18)
(25)
36.1%
(6)
(8)
(9)
62.0%
13.9%
Profit for the period
102
150
47.0%
49
48
44
(11.0%)
(9.2%)
74
175
136.3%
22
72
45
102.6%
(37.8%)
Profits (losses) from disposal of equity investments
Pre-tax profit from continuing operations
Profit for the period NET OF NON-RECURRING ITEMS
PPA allocated line by line
11
Net Interest Income at: +6.6% YoY, +3% 3Q/2Q14 and +4.9% 3Q14/3Q13
9M evolution
9M14 vs. 9M13: differential contribution
(€ mln)
(€ mln)
1,291
1,376
1,376
1,291
-111
+155
+41
+6.6%
9M13
NII
in 9M13
9M14
Change in avg.
Volumes
Loans
Funding
Financial
activities
-4.5 bln
-2.0 bln
+1.2 bln
NII
In 9M14
Quarterly evolution
(€ mln)
417 428
468
446 459 454 454
+4.9%
• NII achieved in 3Q14 is the highest in the
last 8 quarters
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
12
Net Interest Income: growing contribution from business with customers
and widening of customer spread
See annex 5 for details
NII from BUSINESS
with CUSTOMERS ((€ mln))
Pricing
(average
bps on
stocks*)
Average
interestbearing
volumes
ol mes
(€ bln)
2Q14
3Q14
361
358
368
Mark-up
280
277
286
Customer Spread
(UBI Banca Group)
168
182
187
Mark-down
-112
-95
-99
85
84
86
80
• ~ 80% of NII generated by
business with customers
p
in
• constant improvement
customer spread:
84
79
Lending
Lending
F di di
F Funding
Funding
NII from FINANCIAL ASSETS &
INTERBANK EXPOSURE (€ mln)
Financial asset
average volumes (€ bln)
*
3Q13
Sept '13
June '14
Sept '14
3Q13
2Q14
3Q14
85
96
100
19.4
20.3
20.6
Sept '13
June '14
Sept '14
Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI)
‒
Increase in markup both
compared to 2Q14 and
3Q13
‒
Decrease in markdown is
due to the 1M EURIBOR
downward trend (-16 bps
Sept ’14
14 vs.
vs June ‘14)
14)
Net yield on financial
portfolio: interest income
stable, improvement due to
lower associated funding
costs
13
Net Commission Income: +2.3% YoY, thanks to good performance of
securities-related business but also to careful management of assets
See annex 6 for details
9M evolution
Net Commission Income (mln/€)
(€ mln)
+2.3%
Guarantees (on State Guaranty Bonds)
908
888
9M13
9M14
vs 9M13
9M13
9M14
(34.8)
(18.4)
-47.1%
Banking Services Commissions
482.7
453.5
-6.0%
Securities Management, Trading
& Advisory Services**
440.2
473.1
+7.5%
Total
888.1
908.2
+2.3%
9M14
First mover in the reimbursement of state guaranteed bonds*
thanks to the presence of other
eligible assets
Tendency affected by volumes of
business
Good performance thanks to
better market conditions and
good performance in AuM (+17
mln/€)
Quarterly evolution
(€ mln)
-3.6%
286
3Q13
310
2Q14
2Q14
3Q14
3Q14
vs 2Q14
3Q14
vs 3Q13
(11.7)
(5.6)
(2.7)
-77.2%
-52.4%
Banking Services Commissions
157.9
152.3
150.6
-1.1%
-4.7%
Securities Management, Trading
& Advisory Services**
139.6
162.9
150.6
-7.5%
+7.9%
Total
285.9
309.6
-3.6%
+4.4%
Net Commission Income (mln/€)
+4.4%
Guarantees (on State Guaranty Bonds)
299
3Q13
298.5
3Q14
* First reimbursement 3 bln/€ value 7th March ’14 and remaining 3 bln/€ value 7th August ’14
** Includes FX negotiations and excludes performance fees
14
Cost control: following in a virtuous path
Total operating costs: -2.5% YoY, with an impressive performance by other
administrative expenses (-36 mln/€ YoY)
-2.5%
Total operating costs
1,603
1,563
D&A (incl. PPA*)
135
-5.4%
128
Additional cost cutting measures
announced on 14 October last
Other Adm. Expenses
494
-7.2%
458
• Closing of 114 sales points (within
January 2015)
• Consequent
negotiation
with
Trade unions currently under way
Staff costs
974
+0.2%
977
(€ mln)
9M13
Total operating costs
(€ mln)
9M14
of which Staff costs
(€ mln)
of which Other admin. expense
(€ mln)
-2.5%
-0.9%
532
3Q13
*
523
2Q14
-7.3%
+0.2%
+2.1%
518
3Q14
-7.3%
328
322
329
159
159
147
3Q13
2Q14
3Q14
3Q13
2Q14
3Q14
PPA effect amounted to € 15.3 mln in 9M13 and to € 14.8 mln in 9M14
15
Stock of net deteriorated loans substantially stable, benefiting from lower
inflows from performing loans (-37.2% 9M14 vs 9M13) and...
GROSS DETERIORATED LOAN STOCKS
(€ mln)
+0.4 bln/€
NET DETERIORATED LOAN STOCKS
(€ mln)
10,958
12,367
12,674
Sept '13
13,089
9,169
9,448
9,312
8,105
+1.5%
+3.3%
+12.8%
Dec '12
+0.1 bln/€
+1.0 bln/€
+1.4 bln/€
+13.1%
Dec '13
Sept '14
TOTAL INFLOWS FROM PERFORMING TO
DETERIORATED LOANS
Dec '12
Sept '13
Dec '13
MAIN OUTFLOWS FROM DETERIORATED LOANS
(€ mln)
9M14
2,989
3,064
1,923
-37.2%
9M12
9M13
Sept '14
vs
9M13
BACK TO PERFORMING
627 mln/€
- 172 mln/€
LOANS CASHED-IN
734 mln/€
+50 mln/€
LOANS WRITE-OFFS
423 mln/€
+115 mln/€
9M14
16
... increase in coverage: +130 bps
LOAN LOSS PROVISIONS
Annualised
cost of credit
(bps)
86
98
35.4%
36.2%
37.8%
25.9%
26.5%
27.8%
626
STATED
CASH
COVERAGE
(€ mln)
9M13
9M14
OTHER KEY ELEMENTS TO ASSESS
THE GROUP LOAN PORTFOLIO
+130 bps
+66 bps
Sept' 13
Dec '13
Sept' 14
30 Sept '13
31 Dec '13
30 Sept '14
NPLs (sofferenze)
41.30%
41.60%
40.53%
..including write-offs
55.6%
56.0%
55.0%
Impaired loans (incagli)
14.03%
15.12%
16.11%
 Retail: 56.3% (57.1% in June ’14)
Restructured loans
15.28%
13.94%
16.73%
 Corporate: 48.3% (49.7% in June ‘14)
Past due loans
3.06%
2.83%
4.49%

Loan To Value * (Network banks + UBI):

Performing loans:
 Retail: 45.7% (45.8% in June ’14)
 Corporate: 40.6% (41.2% in June ‘14)

COVERAGE OF DETERIORATED LOANS
COVERAGE
INCLUDING
WRITE-OFFS
577

FROM YEAR END
Impaired Loans:
% of Collateralised (real estate) Positions ** :
 Total portfolio: > 60% (of which NPLs and
Impaired > 64%)
of which
In 9M14, coverage impacted by the sale of 79 mln/€ of gross NPLs
covered at ~ 80%. Pro-forma coverage excluding this event: 40.96%
* Arithmetic mean **The secured portion of the portfolio increases to approx.76% adding up personal guarantees - Source: 2013 Annual Report
17
Outlook
 Net interest income will be influenced by the performance of average volumes
of business, by the maturity of government securities in the fourth quarter which will be replaced in an opportunistic way -, by the benefits of re-pricing
action already taken with regard to funding and by the resilience of medium to
long-term loan spreads
 Net fee and commission income is expected to benefit from the usual and
positive seasonal effects normally experienced in the last quarter of the year
 The expected year-on-year fall in recurring operating expenses is confirmed
 The slowdown in the pace of new defaults on loans recorded in the first nine
months of the year and the results of the AQR allow expectations of a slight
overall year-on-year improvement in loan losses (in terms of absolute
amounts) to be confirmed
18
Annexes
19
Annex 1
Main Reclassified Balance Sheet Items
MAIN ASSETS ITEMS
Figures in millions of euro
30.09.2013
31.12.2013
30.06.2014
30.09.2014
% annual
change
% quarterly
change
Financial assets (AFS, HFT, FV, HTM)
21,576
21,841
22,153
22,617
4.8%
2.1%
Loans to customers
89,846
88,421
87,119
84,947
-5.5%
-2.5%
Property, equipment and investment property
1,909
1,798
1,765
1,741
-8.8%
-1.3%
Intangible assets
2,938
2,919
2,896
2,883
-1.9%
-0.4%
2,537
2,512
2,512
2,512
-1.0%
0.0%
2,386
2,833
2,567
2,567
7.6%
0.0%
Other assets
940
931
1,169
778
-17.2%
-33.5%
Total assets
125,002
124,242
123,226
120,539
-3.6%
-2.2%
of which: goodwill
Tax assets
MAIN LIABILITIES AND EQUITY ITEMS
Figures in millions of euro
30.09.2013
31.12.2013
30.06.2014
30.09.2014
% annual
change
% quarterly
change
Net interbank position*
10,948
10,888
11,886
12,259
12.0%
3.1%
Due to customers
51,223
50,702
47,127
45,582
-11.0%
-3.3%
Securities issued
41,546
41,902
43,049
42,272
1.7%
-1.8%
620
756
620
732
18.2%
18.1%
9,907
10,089
10,603
10,651
7.5%
0.4%
Non-controlling interests
838
842
823
831
-0.8%
1.0%
Profit for the period
102
251
106
150
47.0%
41.1%
125,002
124,242
123,226
120,539
-3.6%
-2.2%
Tax liabilities
Net worth attributable to the Parent
Total liabilities and equity
* Including €12 bln LTRO
20
Capital Ratios (Phased in, Basel 3) as at 30 Sept ‘14:
Common Equity Tier 1 Ratio at 13%, Total Capital Ratio (TCR) at 18.09%
Figures in millions of euro
Common Equity Tier 1 Capital (before filters and transitional provisions)
Transitional provisions (minority interest)
Transitional provisions (AFS Reserves)
Common Equity Tier 1 Capital filters
30 June '14
Basel 3
30 Sept '14
Basel 3
7,974.2
8,021.7
375.6
386.8
-103.6
-103.2
-2.8
-2.1
-59.8
-103.3
8,183.5
8,199.8
Common Equity Tier 1 regulatory adjustments
-519.4
-490.6
of which: negative elements for deduction excess of expected losses over
impairment losses
-519.4
-490.6
7,664.1
7,709.2
Additional Tier 1 (before regulatory adjustments)
39.4
39.0
Additional Tier 1 regulatory adjustments
-39.4
-39.0
of which: negative elements for deduction excess of expected losses over
impairment losses
-39.4
-39.0
0.0
0.0
Tier 1 (CET1 + AT1)
7,664.1
7,709.2
Tier 2 Capital before transitional provisions
3,527.9
3,347.7
Italian Govies filters
Common Equity Tier 1 (after filters and transitional provisions)
Common Equity Tier 1 Capital (CET1)
Additional Tier 1 Capital (AT1)
Tier 2 instruments grandfathering
19.4
6.8
3,547.2
3,354.5
Tier 2 capital regulatory adjustments
-357.9
-339.0
of which: negative elements for deduction excess of expected losses over
impairment losses
-372.6
-353.1
3,189.3
3,015.4
10,853.4
10,724.6
Tier 2 Capital after transitional provisions
Tier 2 Capital
Total Own Funds
(€ mln)
Credit risk
CVA (Credit Value Adjustment) risk
Total prudential requirements
4,815.2
4,743.3
60,190.4
59,291.5
Common Equity Tier 1 Capital Ratio
12.73%
13.00%
Tier 1 Ratio
12.73%
13.00%
Total Capital Ratio (TCR)
18.03%
18.09%
Risk weighted assets
Annex 2
Market risk
Operational risk
Total prudential requirements
30 June ‘14
30 Sept ‘14
4,414.9
4,348.4
10.8
11.5
55.7
333.8
49.6
333.8
4,815.2
4,743.3
21
Annex 3
Indirect Funding shows positive evolution both YoY and QoQ
∆ vs. June ‘14
TOTAL INDIRECT
FUNDING
70.1
71.7
73.7
76.1
+3.4%
27.8
27.8
28.7
30.0
+4.7%
11.6
11.7
12.1
12.2
+1.2%
30.7
32.1
32.9
33.9
+3%
Sept '13
Dec '13
June '14
Sept '14
Sept ‘13
Dec ‘13
June‘14
Sept ‘14
11%
10%
AuM
Bancassurance
AuC
In € bln
AuM
4%
3%
Source: Assogestioni’s
“PATRIMONIO GESTITO*
aggregate
14%
13%
13%
13%
59%
Bond
7%
8%
5%
12%
5%
49%
56%
51%
17%
Balanced
25%
25%
Equity
Flexible
* 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. € 4.9 bln managed by Prudential
Cash
22
Annex 4
Securities Portfolio Composition*
Composition of the portfolio
BY TYPE OF
FINANCIAL
INSTRUMENT
BY FINANCIAL
PROFILE
BY CURRENCY
BY GEOGRAPHICAL
DISTRIBUTION
BY RATINGS (BONDS)
*
**
31.12.2013
30.06.2014
30.09.2014
Government bonds
93.2%
94.8%
94.8%
Corporate bonds (mainly bank issues)
4.6%
4.3%
4.4%
Hedge funds
0.6%
0.6%
0.6%
Funds and shares
1.6%
0.3%
0.3%
Floating rate**
20.6%
49.7%
52.1%
Fixed rate
74.2%
46.6%
44.1%
Structured securities
3.0%
2.8%
3.0%
Shares, funds, convertible bonds
2.2%
0.9%
0.9%
Securities in euro
99.7%
99.7%
99.7%
Securites of the euro area
99.6%
99.7%
99.7%
USA securities
0.0%
0.00%
0.00%
Investment grade
99.1%
99.1%
98.7%
Average rating
Baa2
Baa2
Baa2
Analysis refers to a portfolio which excludes participations, some smaller portfolios and derivatives
Fixed rate securities with asset swaps are considered as floating rate securities; securities in asset swap represent 95% of
floating rate securities as at 30th September 2014
23
Annex 5
Net Interest Income - Customer Spread Details
CUSTOMER SPREADS
in bps on avg. STOCK*
1Q14
2Q14
3Q14
23
23
7
Mark up vs 1M Euribor
Short term
Medium-long term
278
361
253
277
348
257
286
347
268
Mark down vs 1M Euribor
-98
-95
-99
-8
-191
-146
-186
-7
-163
-146
-183
-19
-130
-148
-191
180
182
187
197
199
204
1M Euribor
Sight deposits
Term deposits
Retail bonds
Institutional bonds
UBI Group - Customer spread
of which
Network Banks cust. Spread
* Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI), unless otherwise stated
1Q14 and 2Q14 values restated for consistency
24
Annex 6
Net Commission Income Details
Net Commission Income: 9M Evolution
Net Commission Income (€ mln)
9M13
9M14
9M14 / 9M13
(%)
Guarantees (on State guaranty b onds)
(34.8)
(18.4)
-47.1%
482.7
453.5
-6.0%
Guarantees (b anking activity)
36.8
37.8
2.7%
Collection and payment services
79.8
73.6
-7.8%
BANKING RELATED COMMISSIONS
0
of which:
Services for factoring transactions
17.9
14.5
-19.3%
Current accounts management
151.1
149.6
-0.9%
Other services
197.0
177.9
-9.7%
473.1
7.5%
MANAGEMENT, TRADING & ADVISORY
SERVICES*
440.2
Net Commission Income: Quarterly Evolution
of which:
Portfolio management
174.2
191.1
9.7%
Placement of securities
125.7
134.2
6.8%
Third party services distrib ution
114.3
126.9
11.0%
908.2
2.3%
TOTAL
888.1
Net Commission Income (€ mln)
3Q13
Guarantees (on State guaranty b onds)
(11.7)
2Q14
3Q14
3Q14 / 3Q13 3Q14 / 2Q14
(%)
(%)
(5.6)
(2.7)
-77.2%
-52.4%
157.9
152.3
150.6
-4.7%
-1.1%
Guarantees (b anking activity)
11.6
12.3
11.1
-4.2%
-9.4%
Collection and payment services
26.4
25.3
22.8
-13.6%
-9.8%
BANKING RELATED COMMISSIONS
of which:
Services for factoring transactions
5.5
4.9
4.4
-20.6%
-9.5%
Current accounts management
52.2
50.6
51.5
-1.2%
1.9%
Other services
62.2
59.2
60.7
-2.4%
2.4%
139.6
162.9
150.6
7.9%
-7.5%
Portfolio management
58.8
64.1
67.4
14.7%
5.2%
Placement of securities
33.8
46.5
40.6
20.3%
-12.7%
Third party services distrib ution
39.0
43.9
39.8
2.1%
-9.4%
285.9
309.6
298.5
4.4%
-3.6%
MANAGEMENT, TRADING & ADVISORY
SERVICES*
of which:
TOTAL
* Includes FX negotiations and excludes performance fees
25
Annex 7
Asset Quality Details
LOANS TO CUSTOMERS - AS AT 30 SEPTEMBER 2014
GROSS EXPOSURE
€ mln
%*
IMPAIRMENT
LOSSES € mln
CARRYING AMOUNT
€ mln
%*
COVERAGE
RATIO %
2,665
799
3,911
4,162
4.60%
729
647
0.86%
0.76%
146
30
0.76%
16.73%
4.49%
13,089
14.70%
3,640
9,448
11.12%
27.82%
TOTAL PERFORMING LOANS
75,926
85.30%
428
75,498
88.88%
0.56%
TOTAL LOANS TO CUSTOMERS
89,016
100%
4,069
84,947
100%
4.57%
NPLs (Sofferenze)
6,576
7.39%
IMPAIRED LOANS (Incagli)
4,961
875
677
5.57%
TOTAL DETERIORATED LOANS
RESTRUCTURED LOANS
PAST DUE
0.98%
4.90%
40.53%
16.11%
LOANS TO CUSTOMERS - AS AT 30 JUNE 2014
GROSS EXPOSURE
€ mln
%*
IMPAIRMENT
LOSSES € mln
CARRYING AMOUNT
€ mln
%*
COVERAGE
RATIO %
2,579
798
3,771
4,117
4.33%
717
652
0.82%
0.75%
121
33
0.75%
14.49%
4.78%
12,788
14.04%
3,531
9,257
10.63%
27.61%
TOTAL PERFORMING LOANS
78,311
85.96%
449
77,862
89.37%
0.57%
TOTAL LOANS TO CUSTOMERS
91,099
100%
3,980
87,119
100%
4.37%
NPLs (Sofferenze)
6,351
4,915
6.97%
838
685
0.92%
TOTAL DETERIORATED LOANS
IMPAIRED LOANS (Incagli)
RESTRUCTURED LOANS
PAST DUE
5.40%
4.73%
40.61%
16.23%
* As a percentage of total loans
26