PRESS RELEASE. Dividend proposed of 8 eurocents per share (6 eurocents in 2013)

Transcription

1 PRESS RELEASE The Group s solid capital strength is confirmed: Common Equity Tier 1 ratio phased in as at 31 st December 2014: 12.33% 1 (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) Dividend proposed of 8 eurocents per share (6 eurocents in 2013) Basel 3 phased in leverage ratio of 5.78% Basel 3 fully loaded leverage ratio estimate of 5.42% Growth in core revenues and operating income in 2014 compared with 2013 Consolidated profit net of non-recurring items of million, up 46.2% compared with million in 2013 Stated results for 2014 Operating income of 3,409.6 million (-0.8% compared with 2013) Net interest income of 1,818.4 million (+3.9%) Net fee and commission income of 1,226.6 million (+3.3%) Finance result of 199,7 million ( million in 2013) Constantly lower operating expenses down to 2,108.2 million (-1.6%) The sixth consecutive year of cost reduction Net operating income of 1,301.4 million (+0.5%) Loan loss rate of 108 basis points or 929 million - inclusive of the results of the AQR - vs 107 basis points or 943 million in 2013 New inflows of performing loans to deteriorated status down significantly by 36.2% compared with 2013 Profit on continuing operations before tax of million (+57.4% and +36% net of non recurring items) Consolidated loss for the Group of million - compared with a profit of million in following the recognition of approximately 883 million of net impairment losses mainly on goodwill and intangible assets (no impact on real profitability, +32bps on CET1 following recognition in P&L of deferred taxes relating to goodwill recognised for tax purposes, lower PPA (- 6 million) starting from 2015) 1 Mainly following the update of the risk parameters, as already announced in previous press releases. 1

2 Approximately 80% of staff exits planned under the Framework Agreement signed with trade unions on 26 th November 2014 (out of a total of 500 workers) were complete as at 31 st January 2015 Loans at 85.6 billion, up 0.8% compared with September 2014 Positive trend confirmed in January 2015 Direct funding at 93.2 billion, up 6.1% compared with September 2014 *** Bergamo, 11 th February 2015 The Management Board of Unione di Banche Italiane Scpa (UBI Banca) has approved the draft separate and consolidated annual reports of UBI Banca as at and for the year ended 31 st December 2014, which will be submitted for approval to the Supervisory Board on 11 th March The Management Board will submit a proposal to the Registered Shareholders' Meeting, to be held in first call on 24 th April 2015 and in second call on 25 th April 2015, to distribute a dividend of 0.08 per share on the 900,265,380 shares outstanding (equal to the number of shares that constitute the share capital net of treasury shares held in portfolio). If approved by the shareholders in the amount proposed, the dividend will be paid with ex dividend date, record date and payment date respectively on 18 th, 19 th and 20 th May The total dividend payout will be approximately 72 million, drawn from the extraordinary reserve. * * * Impairment When the financial statements were prepared for 2014, UBI Banca recognised net impairment losses mainly on goodwill and intangible assets of million net of taxes and non-controlling interests. This write-down reflects the results of the annual impairment test carried out, which incorporated, within the valuation model, the impact of widespread exogenous signals which affect the Italian banking system, including confirmation of a scenario of prolonged low interest rates, low expected growth in the economy and low expectations also for inflation. These factors of uncertainty were carefully weighted in the definition of the economic components and of the capital targets used to measure impairment. It is also underlined that, although it has an accounting impact on the result for the year, impairment: 1. does not reduce common equity because both goodwill and intangible assets are deducted from the regulatory capital on the date of initial recognition. Also, in the case in point, since a portion of the impairment amounting to approximately 650 million gross relates to goodwill recognised for tax purposes, a positive impact of 32 bp was generated on the common equity ratio, resulting from recognition of the relative deferred taxes in the income statement; 2. brings with it an annual advantage immediately in 2015 in terms of lower amortisation expenses on the intangible assets written-down, amounting to approximately 6 million. In consideration of the above, the Group generated positive recurring income, reflected in an increase in equity, which has allowed the Management Board to confirm its policy to distribute a dividend to shareholders, in full respect of regulatory capital parameters. 2

3 * * * A brief summary of operating performance The year 2014 ended with recognition of approximately 882,7 million of net impairment losses on goodwill and intangible assets as reported above, with a loss of million compared with a profit of million in Profit for the year net of non-recurring items, which is representative of operating performance, came to million, a significant increase of 46.2% compared with million in Core operating income performed well in 2014, up by over 107 million compared with 2013, due to the trend for net interest income ( million) and net fee and commission income ( million), while the finance result, although very positive, moved towards more normal levels compared with 2013 ( 200 million compared with 325 million in 2013). On the cost front, the contraction in operating expenses continued for the sixth consecutive year, down by 1.6% approximately 34 million compared with 2013, notwithstanding substantial expenses for projects during the year. As concerns lending, impairment losses on loans of 929 million inclusive of the results of the AQR - were recorded in 2014, compared with 943 million in The appreciable reduction in the generation of new deteriorated loans confirmed the tendency that took shape during the year: inflows from performing to deteriorated loan status fell by 36.2% compared with 2013, which supports expectations of lower loan losses in coming years. From the viewpoint of assets, the fourth quarter of 2014 saw a slight increase in loans. This encouraging trend is confirmed by initial figures for January, also assisted by the granting of the first loans related to the TLTRO. Finally, December 2014 saw a near-stabilisation of deteriorated loan stocks, both in gross terms (+ 0.4 billion, while they grew by 1.7 billion in 2013 and by 2.4 billion in 2012) and in net terms (+ 0.2 billion, while they grew by 1.2 billion 2013 and by 1.8 billion in 2012). 3 * * * Group operating results in 2014 compared with 2013 In 2014, Group operations generated a profit on continuing operations before tax with growth of 57.4% to 449 million, up from approximately 285 million achieved in On the earnings front, operating income stood at 3,409.6 million, slightly down by 0.8% compared with The strong performance by core revenues should be underlined here (both net interest income and net fee and commission income), up by a total of 107 million, while although the finance result showed a profit of approximately 200 million, it did not replicate the record result achieved in 2013 (down 125 million year-on-year). More specifically, net interest income, amounting to 1,818.4 million, recorded year-on-year growth of 3.9% (+ 68 million) driven by the following: - good results for ordinary banking business with customers, up by 29.2 million to 1,434.2 million, following a further improvement in the interest rate spread which widened by 19 basis points (up to an average of 1.84% for the year from 1.65% in 2013) due mainly to a significant fall in the cost of funding but also to firm performance by the mark-up, achieved notwithstanding

4 the year-on-year fall in average lending volumes and the strong competition, especially on the short-term loan portfolio. The result for business with customers would be even more positive (+ 35 million) if a negative one-off component were excluded amounting to approximately 5 million, recorded at the end of the year, following the introduction of a new methodology for the accounting of interest on claims in Prestitalia, which, instead of being accrued in the net interest margin and adjusted with a provision to the fund for risks and charges, will only be booked when cashed in. This change has impacted the net interest margin with a negative one off in the fourth quarter of the year, partially offset by the release of relevant provisions made to the fund for risks and charges. - the contribution from the securities portfolio, which was up principally as a result of the lower cost of the relative funding to finance it. Profits of equity-accounted investees came to approximately 37 million ( 46.6 million in 2013); in 2014 the aggregate benefits from the contribution by the Joint venture in the asset management sector in China, which amounted to 3.1 million. Net fee and commission income also performed well, up 3.3% to 1,226.6 million compared with 1,187.1 million in Good performance by commissions linked to investment services strengthened further (+7.2% or + 42 million to reach 630 million), while the contribution from general banking services was still affected by lower volumes of business in relation to the weakness of the economic situation (down 4.8% to 615 million). Finally, the item benefited, in terms of lower fee and commission expenses (total savings of approximately 28 million compared with 2013), from the positive effect of the redemption of bonds backed by government guarantees, which was completed in August Financial activities generated a profit of million, down compared with 2013 ( million) due primarily to the effect of the more normal results achieved in the fourth quarter of 2014 ( 49.2 million) compared with the extraordinary performance recorded in the fourth quarter of 2013 ( million). The finance result was composed as follows over the full year: 63.2 million from trading activities ( million in 2013); million ( million in 2013) from the sale and repurchase of financial assets and liabilities and primarily from the sale of Italian government securities ( million); 3.1 million from changes in the fair value of financial assets ( 3.2 million in 2013); while hedging activities generated a loss of million (- 3.3 million in 2013). The trend already recorded for operating expenses continued again in 2014, for the sixth consecutive year, with a further decrease to 2,108.2 million down by 1.6% compared with In detail: - staff costs of 1,301.8 million were substantially unchanged compared with 2013 ( 1,301.7 million), having absorbed over 19 million of wage increases under the national labour contract in force, as a result of efficiencies achieved in recent years. As already reported, a Framework Agreement was signed on 26 th November 2014 between the UBI Banca Group and trade unions which, amongst other things, provides for an early retirement scheme for 500 staff and a curb on costs from the management of leaves and the recourse to flexible working hours and the suspension of working hours. In order to meet the cost of that agreement, a non-recurring amount of 76.3 million net ( million gross) was recognised under the item Expenses for the redundancy scheme. With regard to the provisions contained in the agreement, approximately 80% of the redundancies planned had been completed as at 31 st January 2015 and forecasts of agreements to accept flexible working hours and suspension of working hours have been exceeded by a large margin. This will 4

5 make it possible to achieve a large proportion of the savings forecast at regime (overall 50 million) immediately in 2015, helping to offset possible increases resulting from the new national labour contract currently being negotiated; - other administrative expenses of 635 million were down by 3.8% year-on-year, attributable to a contraction in current expense items and notwithstanding the inclusion of 8.1 million of increased costs in relation to greater project activity carried out in In fact, within investments made, the Group has continued in particular with its investments in IT (including the Digital Bank project, activities in preparation for the merger between IW Bank and UBI Private Investment, the stabilisation and replacement of the Prestitalia IT system, intervention to support single European banking supervision regulations, a project to improve office automation tools, etc.) for a total expense of approximately 85.5 million (compared with 75.3 million 2013); - finally, depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets totalled million, also down by 4.9% compared with 2013, primarily due to lower depreciation and amortisation in the core perimeter of the Group, and notwithstanding the write-off of the Prestitalia IT system, due to a decision taken during the year to migrate onto a new management platform which responds more efficiently to the demands of the company s new business model. Net impairment losses on loans, which included the results of the AQR, fell to million, compared with 943 million in 2013, to give a loss loan rate of 1.08% of total loans, compared with 1.07% the year before. As concerns the AQR in particular, total net impairment losses recognised by the Group as at 31 st December 2014 on the portfolio subject to analysis (corporate portfolio) amounted to 609 million compared with 390 million that resulted from the AQR, which however related to the situation as at 31 st December Furthermore, as already reported when the AQR was carried out, the results of the credit file review valuations, carried out on a sample basis, were extended to apply to the entire portfolios selected by using statistical projection methodologies ( Projections of findings ) and those projections, by nature, cannot be directly interpreted as precise valuations of the need for further provisioning in the financial statements. In detail: million (compared with 199 million indicated in the AQR) relating to selected positions subject to Credit File Review. Those provisions relate both to positions subject to a specific request for an addition to them (carried out totally, partially or not at all in view of changes occurring in those positions during 2014 and of documentary evidence acquired 2 ) and 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; million (compared with 167 million required as a projection onto the entire portfolio of the results that emerged from the positions selected) related to impairment losses recognised on single corporate positions of the Group that fell within the perimeter of the Projection of Findings of the AQR; - approximately 70 million (compared with 23 million indicated as a result of the AQR) consisted of collective impairment losses on the corporate portfolio, inclusive of performing large corporate positions, following the update of the historical data series and the risk parameters, already announced in previous press releases. The impairment losses recognised form part of the normal operations which the Group carries out on the basis of ordinary loan classification and measurement processes and procedures, which 2 Positions with provisions partially added to or not added to recorded proven improvements in them. These included a large corporate position for which, on the basis of changes that occurred and of information acquired (a certified restructuring programme) it was not considered necessary to accept the request for the addition. 5

6 moreover were considered adequate when the PP&A - Processes, Policies and Accounting Review was carried out as part of the Comprehensive Assessment. The year benefited from the profit on the disposal of investments and equity stakes amounting to approximately 94 million gross, of which 85.3 million relating to disposal of approximately 30% of each of the two joint ventures Aviva Vita Spa and Aviva Assicurazioni Vita Spa and the entire investment in UBI Assicurazioni Spa. As a result of the performance described above, profit on continuing operations before tax amounted to million, an improvement of 57.4% compared with Taxes on income for the year from continuing operations amounted to 187 million, compared with a tax credit of 55.1 million in 2013 determined primarily by the presence of a non-recurring item relating to UBI Banca, which was positive by million. Net of non-recurring items, the tax rate in 2014 stood at 50.3%, compared with 52.1% in * * * Group operating results in the fourth quarter of the year The fourth quarter of 2014 saw Group operating income total 852 million compared with million in 3Q 2014 and 951 million in 4Q 2013, affected by the differing performance of the main items: - net interest income came to 442 million ( million in 3Q 2014 and million in 4Q 2013) following the still weak volumes of lending and greater competitive pressure on the supply of short-term lending, which had negative impacts on the customer spread (1.85% compared with 1.87% in 3Q 2014), together with a strong concentration of Italian government securities (approximately 4.9 billion, around 25% of the total portfolio) maturing in the quarter. The result for the quarter also includes a negative one-off component of approximately 5 million following the introduction of a new methodology for the accounting of interest on claims in Prestitalia; - net fee and commission income contributed with million (up 6.7% compared with 3Q 2014 and also up 6.5% compared with 4Q 2013); - the net finance result totalled 49.2 million, to stand at more normal levels compared with the extraordinary performance ( 156 million) in 4Q 2013, but showing an improvement compared with 13.9 million in 3Q Net of the finance result, operating income in 4Q 2014 stood at around 803 million, largely unchanged compared with 3Q 2014 and up on 795 million in 4Q Operating expenses amounted to million compared with million in 3Q 2014 and million in 4Q 2013, due to performance by other administrative expenses which registered the usual seasonal factors compared with 3Q 2014, but which were moreover affected, also compared with 4Q 2013, by approximately 8 million of costs for increased project activities carried out in Staff costs amounted to million ( million in 3Q 2014 and million in 4Q 2013) and net impairment losses on property, plant and equipment and intangible assets were equally stable. Net impairment losses on loans stood at million, showing the usual seasonality compared with million in 3Q 2014, but recording a significant improvement compared with million in the 4Q

7 More specifically, 4Q 2014 included collective impairment losses of approximately 70 million, in relation to the update of the risk parameters used by the advanced methods for calculating capital requirements, already announced in previous press releases (a reversal of 13.2 million was recorded in 3Q 2014 and collective impairment losses amounted to 19 million in 4Q 2013). Finally, the following were recognised in 4Q 2014: profits on the sale of equity investments (related primarily to the disposal of insurance stakes as described above amounting to 83.4 million net); net impairment losses on goodwill and intangible assets ( million net); and expenses relating to the early retirement scheme ( 76.3 million net). The balance sheet * * * Loans to customers as at 31 st December 2014, amounted to 85.6 billion (+0.8% compared with 85 billion at the end of September and -3.1% compared with 88.4 billion in December 2013). After recording a progressive decline during the year, a slight recovery was seen from the end of October which was confirmed in December and, on the basis of the very first data available, is continuing in January 2015 also helped by the granting of the first loans related to TLTRO. The rate of replacement of maturing medium to long term loans recorded by the network banks in the fourth quarter of the year stood at 112%, while that of the product companies improved to 64%. As concerns credit quality, the tendency of total deteriorated gross loans (non-performing loans, impaired loans, restructured and past due/in arrears exposures) to stabilise was confirmed in December 2014, when they stood at 13,049 million, down 0.3% compared with 13,089 million in September 2014 and up 3% compared with 12,674 million at the end of December In 2013, total deteriorated gross loans grew by 15.7% compared to In terms of gross flows, inflows from performing loans to deteriorated status are reducing constantly ( 2,632 million in 2014 down by 36.2% compared with 4,124 million over 12 months in 2013). Again at the end of 2014, coverage for total deteriorated loans was 27.1% (27.8% in September 2014 and 26.5% in December 2013), primarily as a result of the disposal of loans with high coverage (over 300 million of non-performing loans, written down by over 80%, disposed of in 2014). If loan write-offs are included, and considering non performing loans disposed of, coverage for total deteriorated loans as at 31 December 2014 rises to 38.1%. In terms of net amounts, total deteriorated loans stood at 9,508 million as at 31 st December 2014 ( 9,448 million in September 2014 and 9,312 million in December 2013). Total net deteriorated loans were therefore slightly up (+ 200 million) compared with the end of 2013, a marked improvement compared with performance in 2013 when the total had increased by 14.9% (or 1.2 billion) on In detail, net non-performing loans amounted to 4,025 million ( 3,911 million in September 2014 and 3,437 million in December 2013), accounting for 4.70% of total net loans. Following the disposal of over 300 million of gross loans written-down by over 80%, coverage for non-performing loans stood at 38.6% (40.5% in September 2014 and 41.6% in December 2013). If that disposal had not taken place, coverage for non-performing loans would stand at 40.6%. If loan 7

8 write-offs are included in addition to the disposals, then coverage for non-performing loans rises to 55.2%. The level of coverage was also affected by the appearance of new non-performing loans backed by greater guarantees (in December 2014, 66.4% of loans were backed by collateral, compared with 63% in December 2013). Net impaired loans amounted to 4,237 million ( 4,162 million in September 2014 and 4,314 million in December 2013), accounting for 4.95% of total loans. The total coverage for impaired loans stands at 16.3% compared with 16.1% in September 2014 (15.1% in December 2013). Net restructured positions amounted to 717 million ( 729 million in September 2014 and 751 million in December 2013). The relative coverage was 18.5%, up significantly compared with 16.7% in September 2014 and 13.9% in December Net positions past due and/or in arrears amounted to 529 million compared with 647 million in September 2014 and 811 million in December 2013 (coverage of 4.4% compared with 4.5% in September 2014 and 2.8% in December 2013). Total direct funding as at 31 st December 2014, amounted to 93.2 billion compared with 87.9 billion in September 2014 ( 92.6 billion in December 2013). This change was due primarily to the greater use of repurchase agreements with the Cassa di Compensazione e Garanzia, while funding from ordinary customers remained stable at 74 billion ( 74 billion in September 2014 and 74.7 billion in December 2013). The ratio of loans to deposits was 91.9% (96.7% at the end of September 2014 and 95.5% at the end of December 2013). At the date of this report, Group exposure to the ECB consisted of a total of 5 billion of LTRO (which will be repaid with value date 26 th February 2015) and of 3.2 billion of TLTRO, recognised within the item Due to banks and therefore not included in direct funding. Liquidity indicators calculated according to Basel 3 rules (NSFR and LCR) are greater than 1 even in the presence of an ordinary funding structure not based on LTRO/TLTRO support. Assets eligible for refinancing as at 30 th January 2015 totalled 29.8 billion net of haircuts. At the end of 2014, the Group s financial assets totalled 23.7 billion, of which 21.9 billion related to Italian government securities ( 20.7 billion in September 2014 and 19.7 billion in December 2013). With a view to supporting net interest income in relation to the demand for loans, the Group decided to replace government securities maturing in the fourth quarter of Securities maturing in 2015 are of negligible amount ( 0.3 billion). Again at the end of 2014, indirect funding from ordinary customers stood at 75.9 billion compared with 76.1 billion in September 2014 and 71.7 billion in December Positive performance was recorded both by assets under management in the strict sense of the term, which reached 30.7 billion (+2.4% compared with September 2014) and also by insurance funding, which rose to 12.6 billion (+3% compared with September 2014). Finally assets under custody amounted to 32.5 billion ( 33.9 billion in September 2014). Following impairment losses on goodwill and intangible items, consolidated equity of the UBI Banca Group as at 31 st December 2014, including profit for the period, amounted to 9,804 million ( 10,801 million in September 2014 and 10,339 million at the end of December 2013). * * * 8

9 Capital ratios The CET1 ratio of the Group as at 31 st December 2014 was 12.33%. The reduction compared with 30 th September 2014 (13%) is attributable primarily to the annual update of the risk parameters used in the advanced methods for calculating capital requirements, already announced in previous press releases. These parameters reflect the negative 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). Again as at 31 st December 2014, the total capital ratio stood at 15.29%. The reduction compared with 30 th September 2014 (18.09%) is due to the reasons described above and to a recent more restrictive interpretation given by the authorities on the qualifications for the inclusion of subordinated liabilities issued after 31/12/2011 in regulatory capital with a contractual amortisation schedule which starts to run before five years since issuance, which are totally excluded from the calculation of own funds. For the UBI Group this concerns only one single subordinated bond for approximately 926 million with a negative impact of 150 basis points on the total capital ratio. Although that change in the interpretation of the qualification criteria has impacted the indicator for total Group capitalisation, it is underlined that there are no impacts in terms of change in the risk because that liability continues both formally and substantially to provide identical support in terms of protection to unsubordinated creditors. * * * Human resources of the UBI Banca Group totalled 18,132 as at 31 st of December 2014 (18,187 in September 2014 and 18,337 in December 2013). At the end of the period, the branch network consisted of 1,670 branches in Italy (as in September 2014) and six abroad (unchanged). As at 19 January 2015, following the announced rationalization of the distribution network, the branch network totals 1,560 in Italy and 6 abroad. * * * Statement of the Senior Officer Responsible for the preparation of corporate accounting documents Elisabetta Stegher, as the Senior Officer Responsible for preparing the corporate accounting documents of Unione di Banche Italiane Scpa, hereby declares, in compliance with the second paragraph of article 154 bis of the Testo unico delle disposizioni in materia di intermediazione finanziaria (Consolidated Finance Act), that the financial information contained in this press release is reliably based on the records contained in corporate documents and accounting records. Outlook * * * Net interest income will be affected in 2015 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

10 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 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 * * * For further information please contact: UBI Banca Investor relations Tel investor.relations@ubibanca.it UBI Banca Press relations Cell ; relesterne@ubibanca.it Copy of this press release is available on the website 10

11 Attachments Financial statements UBI Banca Group: - Reclassified consolidated balance sheet - Reclassified consolidated income statement - Quarterly evolution of reclassified consolidated income statement - Reclassified consolidated income statement net of the most significant non-recurring items - Reclassified consolidated income statement net of the most significant non-recurring items: details (2014 and 2013) - Consolidated balance sheet - Mandatory statement - Consolidated income statement - Mandatory statement UBI Banca S.c.p.A.: - Mandatory balance sheet - Mandatory income statement Notes to the financial statements To allow a vision that is more consistent with a management accounting style, reclassified financial statements have been prepared. The comments on the performance of the main statement of financial position and income statement items are made on the basis of the reclassified financial statements. 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. Following the disposal of Banque de Dépôts et de Gestion Sa (Switzerland) on 29th November 2013, the balance sheet as at 31st December 2013 contains no items relating to this Swiss bank, while the income statement for 2013 does contain items relating to this subsidiary from 1st January until 31st October The mandatory financial statements, prepared on the basis of Bank of Italy Circular No. 262 of 22nd December 2005 and subsequent amendments and additions. i

12 UBI Banca Group: Reclassified consolidated balance sheet Figures in thousands of euro Changes % changes ASSETS Cash and cash equivalents 598, ,705 8, % Financial assets held for trading 1,420,506 3,056,264-1,635, % Financial assets designated at fair value 193, ,143-14, % Available-for-sale financial assets 18,554,956 15,489,497 3,065, % Held-to-maturity investments 3,576,951 3,086, , % Loans and advances to banks 3,340,415 4,129, , % Loans and advances to customers 85,644,223 88,421,467-2,777, % Hedging derivatives 649, , , % Fair value change in hedged financial assets (+/-) 64,124 33,380 30, % Equity investments 246, , , % Property, plant and equipment 1,729,107 1,798,353-69, % Intangible assets 1,776,925 2,918,509-1,141, % of which: goodwill 1,465,260 2,511,679-1,046, % Tax assets 2,991,600 2,833, , % Non-current assets and disposal groups held for sale 69,893 79,877-9, % Other assets 931, , % Total assets 121,786, ,241,837-2,455, % LIABILITIES AND EQUITY Due to banks 13,292,723 15,017,266-1,724, % Due to customers 51,616,920 50,702, , % Debt securities issued 41,590,349 41,901, , % Financial liabilities held for trading 617,762 1,396, , % Hedging derivatives 1,009, , , % Tax liabilities 630, , , % Other liabilities 1,994,340 2,111, , % Post-employment benefits 391, ,262 8, % Provisions for risks and charges: 285, ,219-24, % a) pension and similar obligations 80,529 77,387 3, % b) other provisions 204, ,832-27, % Share capital, share premiums, reserves, valuation reserves and treasury shares 10,529,815 10,088, , % Non-controlling interests 555, , , % Profit (loss) for the year -725, , ,597 n.s. Total liabilities and equity 121,786, ,241,837-2,455, % ii

13 UBI Banca Group: Reclassified consolidated income statement Figures in thousands of euro 2014 A 2013 B Changes A-B % changes A/B 4th Quarter 2014 C 4th Quarter 2013 D Changes C-D % changes C/D Net interest income 1,818,387 1,750,801 67, % 442, ,353 (17,279) (3.8%) of which: effects of the purchase price allocation (28,540) (33,983) (5,443) (16.0%) (7,312) (7,528) (216) (2.9%) Net interest income excluding the effects of the PPA 1,846,927 1,784,784 62, % 449, ,881 (17,495) (3.7%) Dividends and similar income 10,044 10,409 (365) (3.5%) 800 1,072 (272) (25.4%) Profits of equity-accounted investees 37,015 46,579 (9,564) (20.5%) 8,198 2,913 5, % Net fee and commission income 1,226,587 1,187,065 39, % 318, ,957 19, % of which performance fees 16,951 14,198 2, % 10,710 14,198 (3,488) (24.6%) Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value 199, ,554 (124,896) (38.5%) 49, ,099 (106,943) (68.5%) Other net operating income/expense 117, , % 33,418 32, % Operating income 3,409,630 3,437,292 (27,662) (0.8%) 852, ,021 (98,983) (10.4%) Operating income excluding the effects of the PPA 3,438,170 3,471,275 (33,105) (1.0%) 859, ,549 (99,199) (10.3%) Staff costs (1,301,779) (1,301,717) % (325,142) (327,339) (2,197) (0.7%) Other administrative expenses (635,034) (659,893) (24,859) (3.8%) (176,742) (165,944) 10, % Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (171,409) (180,188) (8,779) (4.9%) (43,716) (45,139) (1,423) (3.2%) of which: effects of the purchase price allocation (21,416) (20,377) 1, % (6,648) (5,093) 1, % Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets excluding the effects of the PPA (149,993) (159,811) (9,818) (6.1%) (37,068) (40,046) (2,978) (7.4%) Operating expenses (2,108,222) (2,141,798) (33,576) (1.6%) (545,600) (538,422) 7, % Operating expenses excluding the effects of the PPA (2,086,806) (2,121,421) (34,615) (1.6%) (538,952) (533,329) 5, % Net operating income 1,301,408 1,295,494 5, % 306, ,599 (106,161) (25.7%) Net operating income excluding the effects of the PPA 1,351,364 1,349,854 1, % 320, ,220 (104,822) (24.7%) Net impairment losses on loans (928,617) (942,978) (14,361) (1.5%) (302,466) (366,337) (63,871) (17.4%) Net impairment losses on other financial assets and liabilities (8,650) (47,511) (38,861) (81.8%) (6,382) (25,233) (18,851) (74.7%) Net provisions for risks and charges (9,074) (12,372) (3,298) (26.7%) (5,123) 1,961 (7,084) n.s. Profits (losses) from the disposal of equity investments 94,007 (7,324) 101,331 n.s. 94,356 (7,507) 101,863 n.s. Pre-tax profit from continuing operations 449, , , % 86,823 15,483 71, % Pre-tax profit from continuing operations excluding the effects of the PPA 499, , , % 100,783 28,104 72, % Taxes on income for the period/year from continuing operations (186,926) 55,136 (242,062) n.s ,702 (204,145) (99.7%) of which: effects of the purchase price allocation 16,523 17,959 (1,436) (8.0%) 4,781 4, % Post-tax profit (loss) from discontinued operations Profit for the period/year attributable to non-controlling interests (28,918) (25,895) 3, % (3,982) (7,579) (3,597) (47.5%) of which: effects of the purchase price allocation 2,754 3,385 (631) (18.6%) (179) (23.0%) Profit for the year/period attributable to the shareholders of the Parent before redundancies and impairment excluding the effects of the PPA 263, ,566 (83,657) (24.1%) 91, ,280 (128,302) (58.2%) Profit for the year/period attributable to the shareholders of the Parent before redundancies and impairment 233, ,550 (81,320) (25.9%) 83, ,606 (129,208) (60.8%) Redundancy expenses net of taxes and non-controlling interests (76,311) (25,984) 50, % (76,311) (25,984) 50, % Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of taxes and non-controlling interests (882,686) (37,736) 844,950 n.s. (882,686) (37,736) 844,950 n.s. Profit (loss) for the year/period attributable to the shareholders of the Parent (725,767) 250,830 (976,597) n.s. (875,599) 148,886 (1,024,485) n.s. Total impact of the purchase price allocation on the income statement (30,679) (33,016) (2,337) (7.1%) (8,580) (7,674) % iii

14 UBI Banca Group: Reclassified consolidated quarterly income statements Figures in thousands of euro 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Net interest income 442, , , , , , , ,220 of which: effects of the purchase price allocation (7,312) (6,990) (7,782) (6,456) (7,528) (7,859) (9,033) (9,563) Net interest income excluding the effects of the PPA 449, , , , , , , ,783 Dividends and similar income , ,072 1,119 7, Profits of equity-accounted investees 8,198 8,155 9,763 10,899 2,913 12,947 22,213 8,506 Net fee and commission income 318, , , , , , , ,786 of which performance fees 10,710 2,766 2, , Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value 49,156 13,860 74,031 62, ,099 59,088 67,351 42,016 Other net operating income/expense 33,418 33,025 26,950 24,546 32,627 29,030 29,428 26,799 Operating income 852, , , , , , , ,782 Operating income excluding the effects of the PPA 859, , , , , , , ,345 Staff costs (325,142) (328,694) (321,849) (326,094) (327,339) (328,144) (314,881) (331,353) Other administrative expenses (176,742) (147,078) (158,598) (152,616) (165,944) (158,699) (173,557) (161,693) Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (43,716) (42,497) (42,663) (42,533) (45,139) (44,660) (45,114) (45,275) of which: effects of the purchase price allocation (6,648) (4,969) (4,888) (4,911) (5,093) (5,088) (5,098) (5,098) Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets excluding the effects of the PPA (37,068) (37,528) (37,775) (37,622) (40,046) (39,572) (40,016) (40,177) Operating expenses (545,600) (518,269) (523,110) (521,243) (538,422) (531,503) (533,552) (538,321) Operating expenses excluding the effects of the PPA (538,952) (513,300) (518,222) (516,332) (533,329) (526,415) (528,454) (533,223) Net operating income 306, , , , , , , ,461 Net operating income excluding the effects of the PPA 320, , , , , , , ,122 Net impairment losses on loans (302,466) (197,050) (230,475) (198,626) (366,337) (192,749) (226,150) (157,742) Net impairment losses on other financial assets and liabilities (6,382) (267) (3,674) 1,673 (25,233) (5,005) (8,960) (8,313) Net provisions for risks and charges (5,123) (1,249) 7,361 (10,063) 1,961 (2,729) (9,275) (2,329) Profits (losses) from the disposal of equity investments 94, (660) (7,507) (902) 1,609 (524) Pre-tax profit from continuing operations 86, , , ,506 15, ,165 76,108 92,553 Pre-tax profit from continuing operations excluding the effects of the PPA 100, , , ,873 28, ,112 90, ,214 Taxes on income for the period from continuing operations 557 (52,115) (76,666) (58,702) 204,702 (46,480) (46,507) (56,579) of which: effects of the purchase price allocation 4,781 2,059 5,930 3,753 4,169 4,276 4,669 4,845 Post-tax profit (loss) from discontinued operations Profit for the period attributable to non-controlling interests (3,982) (9,194) (8,073) (7,669) (7,579) (5,674) (3,126) (9,516) of which: effects of the purchase price allocation Profit for the period attributable to the shareholders of the Parent before redundancies and impairment excluding the effects of the PPA 91,978 52,673 54,232 65, ,280 56,871 35,081 35,334 Profit for the period attributable to the shareholders of the Parent before redundancies and impairment 83,398 43,640 48,057 58, ,606 49,011 26,475 26,458 Redundancy expenses net of taxes and non-controlling interests (76,311) (25,984) Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of taxes and non-controlling interests (882,686) (37,736) Profit (loss) for the period attributable to the shareholders of the Parent (875,599) 43,640 48,057 58, ,886 49,011 26,475 26,458 Total impact of the purchase price allocation on the income statement (8,580) (9,033) (6,175) (6,891) (7,674) (7,860) (8,606) (8,876) The figure for performance fees relating to previous quarters has been restated to include those accruing on Sicav customer portfolio managements previously not shown. iv

15 UBI Banca Group: Reclassified consolidated income statement net of the most significant non-recurring items 2014 net of non-recurring items 2013 net of non-recurring items Changes % changes Figures in thousands of euro Net interest income (including the effects of the PPA) 1,818,387 1,750,801 67, % Dividends and similar income 10,044 10,409 (365) (3.5%) Profits of equity-accounted investees 37,015 53,860 (16,845) (31.3%) Net fee and commission income 1,226,587 1,187,065 39, % Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value 188, ,860 (49,936) (20.9%) Other net operating income/expense 117, , % Operating income (including the effects of PPA) 3,398,896 3,358,879 40, % Staff costs (1,301,779) (1,301,717) % Other administrative expenses (633,494) (659,893) (26,399) (4.0%) Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (including the effects of PPA) (169,140) (180,188) (11,048) (6.1%) Operating expenses (including the effects of PPA) (2,104,413) (2,141,798) (37,385) (1.7%) Net operating income (including the effects of PPA) 1,294,483 1,217,081 77, % Net impairment losses on loans (928,617) (942,978) (14,361) (1.5%) Net impairment losses on other financial assets and liabilities (3,192) (3,501) (309) (8.8%) Net provisions for risks and charges (7,527) (12,372) (4,845) (39.2%) Profits (losses) from the disposal of equity investments (89) 2,901 (2,990) n.s. Pre-tax profit from continuing operations (including the effects of PPA) 355, ,131 93, % Taxes on income for the year from continuing operations (178,693) (136,042) 42, % Post-tax profit (loss) from discontinued operations Profit for the year attributable to non-controlling interests (29,828) (24,869) 4, % Profit for the year attributable to the shareholders of the Parent 146, ,220 46, % v

16 UBI Banca Group: Reclassified consolidated income statement net of the most significant non-recurring items - details 2014 non-recurring items Figures in thousands of euro 2014 Impairment of goodwill, intangible assets and property, plant and equipment Redundancy expenses (purs. to Framework Agreement 26th November 2014) Disposal of equity investments Profit on the disposal of investment property Change in the substitute tax on the new profit sharing stakes held in the Bank of Italy Impairment of AFS securities Write off of IT systems Integration costs of the merger of UBI Banca Private Banking Investment and IW Bank Interbank Deposit Protection Fund action to assist Banca Tercas 2014 net of nonrecurring items Net interest income (including the effects of the PPA) 1,818,387 1,818,387 Dividends and similar income 10,044 10,044 Profits of equity-accounted investees 37,015 37,015 Net fee and commission income 1,226,587 1,226,587 Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value 199,658 (10,734) 188,924 Other net operating income/expense 117, ,939 Operating income (including the effects of PPA) 3,409, (10,734) ,398,896 Staff costs (1,301,779) (1,301,779) Other administrative expenses (635,034) 1,540 (633,494) Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (including the effects of PPA) (171,409) 2,269 (169,140) Operating expenses (including the effects of PPA) (2,108,222) ,269 1,540 - (2,104,413) Net operating income (including the effects of PPA) 1,301, (10,734) ,269 1,540-1,294,483 Net impairment losses on loans (928,617) (928,617) Net impairment losses on other financial assets and liabilities (8,650) 4, (3,192) Net provisions for risks and charges (9,074) 1,547 (7,527) Profits (losses) from the disposal of equity investments 94,007 (84,384) (9,712) (89) Pre-tax profit from continuing operations (including the effects of PPA) 449, (95,118) (9,712) - 4,821 3,816 1, ,058 Taxes on income for the year from continuing operations (186,926) 2,590 3,184 4,482 (169) (1,169) (510) (175) (178,693) Post-tax profit (loss) from discontinued operations - - Profit for the year attributable to non-controlling interests (28,918) 20 (705) (204) (21) (29,828) Profit for the year attributable to the shareholders of the Parent before redundancies and impairment 233, (92,528) (6,508) 3,777 4,448 2,647 1, ,537 Redundancy expenses net of taxes and non-controlling interests (76,311) 76,311 - Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of taxes and non-controlling interests (882,686) 882,686 - Profit for the year attributable to the shareholders of the Parent (725,767) 882,686 76,311 (92,528) (6,508) 3,777 4,448 2,647 1, ,537 In the second quarter of 2014 non-recurring items included an expense of 19.6 million due to an adjustment to IRAP deferred tax assets already recognised in the financial statements for the year ended 31 st December 2013, due to a reduction in the IRAP tax rate from 4.65% to 4.20% (the 0.92% surtax was unchanged) introduced by Decree Law No. 66/2014 with effect from the financial year That item has no longer been recognised due to the provisions of paragraph 23 of article 1 of the 2015 Legge di stabilità ( stability law annual finance law), which has retroactively repealed the provisions of article 2 of Decree Law No. 66/2014 on the reduction of the IRAP rate, thereby restoring the previous rates effective immediately from 2014 (a base rate of 4.65% for banks plus surtaxes). vi

17 UBI Banca Group: Reclassified consolidated income statement net of the most significant non-recurring items - details 2013 non-recurring items Figures in thousands of euro 2013 Disposal of equity stakes Disposals of equity investments Net impairment losses on AFS financial assets Profit on Bank (equity of Italy stakes instruments, bonds and units in UCITS) Net impairment losses on goodwill and property, plant and equipment Profit on the repurchase of financial liabilities (subordinated EMTN) Redundancy expenses (purs. to Trade union agreement of 6th March 2014) Intervention by the Interbank Deposit Protection Fund to support Tercas Recognition of IRAP (regional production tax) DTA on realigned goodwill Modification of the 2013 Corporate Income tax (IRES) rate 2013 net of nonrecurring items Net interest income (including the effects of the PPA) 1,750,801 1,750,801 Dividends and similar income 10,409 10,409 Profits of equity-accounted investees 46,579 7,281 53,860 Net fee and commission income 1,187,065 1,187,065 Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value 324,554 (51,642) (29,230) (4,822) 238,860 Other net operating income/expense 117, ,884 Operating income (including the effects of PPA) 3,437,292 (51,642) - - (29,230) - (4,822) ,281 3,358,879 Staff costs (1,301,717) (1,301,717) Other administrative expenses (659,893) (659,893) Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (including the effects of PPA) (180,188) (180,188) Operating expenses (including the effects of PPA) (2,141,798) (2,141,798) Net operating income (including the effects of PPA) 1,295,494 (51,642) - - (29,230) - (4,822) ,281 1,217,081 Net impairment losses on loans (942,978) (942,978) Net impairment losses on other financial assets and liabilities (47,511) 26,898 17,112 (3,501) Net provisions for risks and charges (12,372) (12,372) Profits (losses) from the disposal of equity investments (7,324) (456) 10,681 2,901 Pre-tax profit from continuing operations (including the effects of PPA) 285,309 (52,098) 10,681 26,898 (29,230) - (4,822) - 17,112-7, ,131 Taxes on income for the year from continuing operations 55,136 (4,040) (2,134) (5,632) 3,508 1,594 (4,706) (212,645) 32,877 (136,042) Post-tax profit (loss) from discontinued operations - - Profit for the year attributable to non-controlling interests (25,895) (521) 5,197 (969) (2,681) (24,869) Profit for the year attributable to the shareholders of the Parent before redundancies and impairment 314,550 (56,138) 8,547 20,745 (20,525) - (3,228) - 11,437 (212,645) 37, ,220 Redundancy expenses net of taxes and non-controlling interests (25,984) 25,984 - Net impairment losses on goodwill and property, plant and equipment net of taxes and non-controlling interests (37,736) 37,736 - Profit for the year attributable to the shareholders of the Parent 250,830 (56,138) 8,547 20,745 (20,525) 37,736 (3,228) 25,984 11,437 (212,645) 37, ,220 vii

18 UBI Banca Group: Consolidated Balance Sheet - Mandatory statement - ASSET ITEMS (figures in thousand euro) Cash and cash equivalents 598, ,705 Financial assets held for trading 1,420,506 3,056,264 Financial assets designated at fair value 193, ,143 Available-for-sale financial assets 18,554,956 15,489,497 Held-to-maturity investments 3,576,951 3,086,815 Loans and advances to banks 3,340,415 4,129,756 Loans and advances to customers 85,644,223 88,421,467 Hedging derivatives 649, ,609 Fair value change in hedged financial assets 64,124 33,380 Equity investments 246, ,886 Technical reserves of reinsurers - - Property, plant and equipment 1,729,107 1,798,353 Intangible assets 1,776,925 2,918,509 of which: goodwill 1,465,260 2,511,679 Tax assets: 2,991,600 2,833,188 a) current 547, ,039 b) deferred 2,443,896 2,281,149 - of which pursuant to Law No. 214/2011 2,078,403 1,864,579 Non current assets and disposal groups held for sale 69,893 79,877 Other assets 931, ,388 Total assets 121,786, ,241,837 LIABILITIES AND EQUITY (figures in thousand euro) Due to banks 13,292,723 15,017,266 Due to customers 51,616,920 50,702,157 Debt securities issued 41,590,349 41,901,779 Financial liabilities held for trading 617,762 1,396,350 Hedging derivatives 1,009, ,545 Tax liabilities: 630, ,359 a) current 303, ,246 b) deferred 326, ,113 Other liabilities 1,994,340 2,111,533 Post employment benefits 391, ,262 Provisions for risks and charges: 285, ,219 a) pension and similar obligations 80,529 77,387 b) other provisions 204, ,832 Valuation reserves 113,836 (170,968) Reserves 3,450,082 3,294,414 Share premiums 4,716,866 4,716,866 Share capital 2,254,371 2,254,371 Treasury shares (5,340) (6,121) Non-controlling interests 555, ,975 Profit (loss) for the year (725,767) 250,830 Total liabilities and equity 121,786, ,241,837 viii

19 UBI Banca Group: Consolidated Income Statement - Mandatory statement - figures in thousands of euro Interest and similar income 3,015,058 3,254,962 Interest expense and similar (1,196,671) (1,504,247) Net interest income 1,818,387 1,750,715 Fee and commission income 1,403,306 1,382,528 Fee and commission expense (176,719) (195,462) Net fee and commission income 1,226,587 1,187,066 Dividends and similar income 10,044 10,409 Net trading income 63, ,234 Net hedging loss (11,217) (3,318) Income from disposal or repurchase of: 144, ,475 a) loans and receivables (15,348) (3,149) b) available-for-sale financial assets 168, ,025 d) financial liabilities (8,320) 599 Net income on financial assets and liabilities designated at fair value 3,073 3,163 Gross income 3,254,676 3,272,744 Net impairment losses on: (937,267) (990,489) a) loans and receivables (928,617) (942,978) b) available-for-sale financial assets (4,821) (26,898) d) other financial transactions (3,829) (20,613) Net financial income 2,317,409 2,282,255 Net income from banking and insurance operations 2,317,409 2,282,255 Administrative expenses (2,273,143) (2,194,758) a) staff costs (1,413,312) (1,337,687) b) other administrative expenses (859,831) (857,071) Net provisions for risks and charges (9,074) (12,372) Net impairment losses on property, plant and equipment (88,924) (119,956) Net impairment losses on intangible assets (143,141) (78,535) Other net operating income 336, ,511 Operating expenses (2,177,916) (2,095,110) Profits of equity investments 122,293 46,506 Net impairment losses on goodwill (1,046,419) (24,895) Profits (losses) on disposal of investments 8,729 (7,251) Pre-tax profit (loss) from continuing operations (775,904) 201,505 Taxes on income for the year from continuing operations 72,314 72,632 Post-tax profit (loss) from continuing operations (703,590) 274,137 Post-tax profit (loss) from discontinued operations - - Profit (loss) for the year (703,590) 274,137 Profit attributable to non-controlling interests (22,177) (23,307) Profit (loss) for the year attributable to the Parent (725,767) 250,830 ix

20 UBI Banca: Balance sheet - mandatory statement Figures in thousands of euro ASSETS Cash and cash equivalents 160, ,927 Financial assets held for trading 1,544,835 3,191,080 Financial assets designated at fair value 193, ,143 Available-for-sale financial assets 18,066,883 14,753,276 Held-to-maturity investments 3,576,951 3,086,815 Loans and advances to banks 14,055,649 13,487,366 Loans and advances to customers 23,330,321 25,168,913 Hedging derivatives 647, ,310 Fair value change in hedged financial assets (+/-) 5,583 5,418 Equity investments 9,624,011 10,608,614 Property, plant and equipment 634, ,742 Intangible assets Tax assets 1,688,730 1,727,626 a) current 331, ,536 b) deferred 1,357,568 1,405,090 - of which pursuant to Law No. 214/2011 1,234,949 1,238,386 Non-current assets and disposal groups held for sale 507 2,329 Other assets 642, ,676 TOTAL ASSETS 74,171,865 73,914,645 Figures in thousands of euro LIABILITIES AND EQUITY Due to banks 19,140,417 24,285,811 Due to customers 7,065,270 7,223,913 Debt securities issued 36,545,668 30,211,092 Financial liabilities held for trading 722,181 1,531,436 Hedging derivatives 937, ,702 Tax liabilities 352, ,144 a) current 169, ,645 b) deferred 183,487 90,499 Other liabilities 751, ,077 Post-employment benefits 45,443 40,166 Provisions for risks and charges: 45,218 58,488 a) pension and similar obligations 1,144 1,061 b) other provisions 44,074 57,427 Valuation reserves 164, ,564 Reserves 2,354,285 2,337,924 Share premiums 4,716,866 4,716,866 Share capital 2,254,371 2,254,371 Treasury shares (-) -5,340-6,121 Profit (loss) for the period/year (+/-) -918,437 71,340 TOTAL LIABILITIES AND EQUITY 74,171,865 73,914,645 x