The UBI Banca Group

Consolidated Results as at 31st March 2020

8 May 2020

Disclaimer

This document has been prepared by Unione di Banche Italiane Spa ("UBI") for informational purposes only and for use in the presentation of May 2020.

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 possess stock of the bank. The disclosure relating to shareholdings of top management is available in the annual reports.

References

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.

Figures in this presentation slides may not add up exactly to correspond to the total amount indicated, due to rounding differences.

2

A solid start to 2020 allowing strong intervention in the Covid19 emergency

Strong CAPITAL

Strong LIQUIDITY

High quality LOAN BOOK

  • FL CET1 ratio to 12.86%
  • MDA buffer vs CET1 9.25% SREP to 361 bps (459 in the hypothesis of full application of art104a of CRD5)
  • Both CET1 ratio and MDA buffer are higher than Business Plan projections (CET1 >12.5 and MDA buffer > 330 bps) even netof 2019 dividend (accounting for 26 bps)
  • Total capital ratio to 17.05% also following successful issuance of AT1 in Jan 2020
  • MREL requirements largely exceeded
  • FL Leverage ratio to 5.87%
  • LCR and NSFR > 100
    Thanks to strong issuance plan carried out in 2019, no worries if markets were to close in 2020
  • Liquid assets to €36.8 billion, of which €23.8 unencumbered
  • High quality performing loan book (only 2.7% is high risk) generating low default rate (1% annualised in 1Q2020)
  • Low level of NPEs following work out and sales carried out in 2019, still constantly decreasing: in 1Q2020 gross NPE ratio to 7.5% of total loans (6.7% taking account of SME bad loan sale currently being prepared)
  • High recovery rate to 12.5% (cash in + back to performing) of total NPEs.
  • Bad loan recovery rate (cash in) to 7.1%

3

Liquidity to the economy in the Covid19 emergency and Initiatives to support customers well above the Group's Market share

Covid-related additional measures

  • €10 billion available to the Territories to support families, businesses and third sector launched on 1st April 2020
  • Immediate application and fast procedures to allow customers access to opportunities offered by Government Decrees, even in remote
    • Financing up to €25,000 with 100% state guarantee: as at the 7th of May, loans which have obtained the guarantee and are ready for disbursement amount to 40% of the total at system level*
    • Medium/large lending tickets with MCC guarantee (over €25K): over 2 bln/€ of applications (average guarantee 80%)
    • 130.000 "moratorie" out of a total of over 1.600.000** at system level (8% share)

*37,250 applications out of a total at system level of 93,301

4** latest avaialable system data

A good set of results in 1Q20, with a significant increase in net profit in a complex environment

NET PROFIT *

(€ mln)

93.6

83.4

38.1

1Q19

4Q19

1Q20

5 *Restated for 2019 to reflect change of measurement criteria for real estate : Net profit for 1Q19 previously published €82.2 million; Net profit for 4Q2019 previously published €60.1 million,

Resilience of Net Interest Income expected to continue in 2020

Net Interest Income (mln/€)

(mln/€)

412 -1.7% 405

Business with customers (including IFRS 9 impacts)

374

-1.0%

370

Other components

(financial activities

and interbank)

-8.2%

36

35

4Q19

1Q20

EURIBOR (1 month)

-46 bps

-48 bps

mln/€

1Q19

4Q19

1Q20

Business with customers

409

374

370

(including IFRS9)

o/w business with customers

383

364

359

o/w IFRS9

26

10

11

Financial activities

44

51

37

Interbank business

-8

-13

-2

Net Interest Income

446

412

405

EURIBOR (1 month)

- 37 bps

- 46 bps

48 bps

1Q20 vs 4Q19:

  • Stable NII from business with customers vs 4Q19 considering calendar effect (-4 mln/€)

1Q20 vs 1Q19

  • Impact on funding component of the decrease of -11 bps in 1M Euribor and of the intense issuing of institutional funding in 2019 which enabled the required MREL levels to be reached in advance and UBI to be resilient in case of potential market closures in 2020
  • lower IFRS9 contribution, mainly following the massive bad loan reduction and disposals completed in 2019, (gross NPE volumes down by -29.4% in 12 months) enabling the Bank to face the Covid emergency with higher quality assets

6

Overall Customer Spread improving in 1Q20 to 177 bps New M/L term originations at 3.9 bln/€ in 1Q20

GROUP CUSTOMER

SPREAD*

(M/L and SHORT TERM,

STOCK

BANKING GROUP +

PRODUCT COMPANIES

In bps against 1M Euribor,

including hedging

derivatives and excluding

TLTRO2

FOCUS ON

MEDIUM/LONG

TERM

VOLUMES &

TRENDCOMMERCIAL SPREADS

BANKING

PERIMETER

239

243

244

247

250

Mark up on lending

177

Customer spread

176

177

173

175

Mark down on funding

63

66

71

72

73

1Q19

2Q19

3Q19

4Q19

1Q20

Spread 10Y BTP-BUND

257

262

183

148

166

(period average)

Higher incidence

of TLTRO

lending products

1Q19

4Q19

1Q20

in 1Q20

NEW ORIGINATIONS

Net of TLTRO

Flows

+2.8bln/€

+2.7bln/€

+3.9bln/€

lending (approx.

Commercial Spread

243bps

239bps*

195bps*

1.4bln/€ in

1Q20), spread

REIMBURSEMENTS

up 5bps vs

Flows

-3.3bln/€

-3.7bln/€

-3.2bln/€

4Q19 (to

Commercial Spreads

195bps

206bps

193bps

256bps)

* Exluding TLTRO lending, commercial spread at 251bps in 4Q19 and 256bps in 1Q20

7

2019 intense issuing activity (5bln/€ institutional and 2.2bln/€ retail*) guarantees a comfortable liquidity position

In order to optimise the Group's capital structure, inaugural 400 mln/€ AT1 issuance placed in January 2020

FUNDING MATURITY PROFILE

Situation as at 31st March 2020

(nominal amounts in bln/€)

0.10

AT1

Retail bonds

2.27

1.76

1.75

Covered Bonds (CB)

0.50

0.40*

EMTN

0.07

0.06

0.01

0.04

1.52

1.02

1.70

1.25

1.50

1.00

1.25

0.20

1.50

0,750.75

0.80

0,14

0.41

0.40

0.50

0.50

0.50

0.50

0,25

1Q 2Q-3Q-4Q

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2033

2020

2020

2020 RETAIL ISSUANCES

2020 INSTITUTIONAL ISSUANCES

Date

Amount

Avg Maturity

Avg Coupon

Settl. Date

Size

Type

Avg Coupon

1Q 2020

0.02 bln/€

3 years

1.04%

Jan 2020

0.40 bln/€

Non-Cumulative Temporary Write-Down Deeply

5.875%

Subordinated Fixed Rate Resettable Notes**

Jan 2020

0.10 bln/€

Private placements

undisclosed

NB: in Feb 2020 UBI Banca also issued approx. 0.1 bln/€ of certificates

* Against total expiries of 5.8 bln/€

8 * * AT1 perpetual securities callable by the issuer, from 20/01/2025 until 20/06/2025 and subsequently on each coupon payment date

Net fees and commission income shows strong growth vs 1Q19: +4.9%

Net fees and commissions (mln/€)

+4.9%

446420

401

76

Net fees & commission income from

54

60

management, trading

and advisory

services excluding

upfront and

performance fees at the highest level

172

177

+3.5%

183

176

193

-8.2%

178

o/w synthetic

1Q19

4Q19

1Q20

o/w -8

o/w -9

o/w - 11

securitisation

fees

Upfront* and performance fees

Management, trading and advisory services

Banking related commissions

ever, despite Covid19 strong impact

in March

• AUM placed in 1Q20 stable vs 1Q19

(about 3 bln/€, vs 2.3 bln/€ in 4Q19)

• Traditional Banking related commission:

+1.2% vs 1Q19. 4Q19 includes items

typically booked at year end (especially

related to payments, e.g. year end

rappels)

9 * Upfront fees include both placement of SICAV & funds and insurance products

Net of systemic charges, operating costs are down 1.7% vs 1Q19 and 3.6% vs 4Q19 thanks to strict control

Total Operating Costs (mln/€)

-1.7%

Costs net of

-3.6%

Systemic

charges

561

572

552

D&A

52

59

57

Admin. Expenses (ex

144

158

139

systemic charges)

Staff

364

355

355

1Q19

4Q19

1Q20

Systemic

RF: 42

DGS: 4

RF: 42

charges

Total Operating

603

577

594

Costs

  • Staff costs (-2.6% vs 1Q 19) benefit from headcount reduction (-757resources vs March 2019) notwithstanding application of new National Labour Contract
  • Administrative expenses down both vs 4Q19 (-11.9%)and vs 1Q19 (-3.2%)

10

A new way of working drives a different cost allocation

Health and safety measures

Communication

Social distancing

Organisational

measures

measures

  • More smart working

During the crisis all employees of the Group were enabled to smart work and 20,000 remote work stations were organized

5,600 employees on average were connected in remote conference calls/videos every day

Lower commuting costs

Lower costs in terms of paper/toner, energy, etc

  • Social distancing and organizational measures:

During the crisis, all small business corporate, premium and private relationship managers were enabled to remote selling (4,700 resources) and access to the branches was allowed upon appointment

Change in the role of branches, which has been anyway decreasing over time but at a slow pace - Strengthening of contact centers

Higher costs to ensure clean and safe environment to customers and employees

Re-organisation of real estate Remote learning

  • Communication

How to communicate after Covid19 both within and outside the Bank? More digital marketing

The role of mail and mailing costs

Videoconferences with customers eg advisory services…….

11

Asset quality: performing high risk positions down again to 2.7% of the portfolio. Low new inflows to NPEs from performing loans (-82% vs 2009 peak). Annualised default rate at 1%

GROSS PERFORMING PORTFOLIO UNDER AIRB

DEFAULT RATE*

Loans at amortised cost and at fair value through P&L as at 31.03.2020

High risk

2.7%

1.85%

Unrated 3.8%

vs 8.4% in Dec '12

vs 5.7% in Dec '12

Including the

MARCH

new

'15

definition of

Medium Risk 10.9%

vs 27.6% in Dec '12

1.0%

default

introduced in

0.8%

July 2019

Low Risk 82.6%

85% of high

vs 58.3% in Dec '12

risk positions

1Q18

1Q19

1Q20

are collateralised

NPEs: GROSS INFLOWS FROM PERFORMING

(mln/€)

-82%

1,134

1,069

from the peak in 2009

870

722

811

650

272

548

623

389

317

390

165

273

240

204

2007

2008

2009

2010

1Q11

1Q12

1Q13

1Q14

1Q15

1Q16

1Q17

1Q18

1Q19

3Q19

4Q19

1Q20

Quarterly average

UBI stand-alone

July 2019: introduction of the

new definition of default

2007 and 2008 gross inflows figures are stated according to table A.1.7. Since 2009 gross inflows figures are stated according to Table "Loans to customers: change in non-performing exposure"

12 * Default rate = gross inflows to NPEs / Gross performing loans at the beginning of the period

  • Gross Inflows from performing - Outflows to performing.

Gross NPE more than halvedsince peak in Sept 2015

-8.8p.p.

-8p.p.

GROSS

15.5%

NPEs/TOTAL

10.4%

GROSS LOANS

7.8%

7.5%

6.7%

%

Considering

Sept '15

Mar '19

Dec '19

Mar '20

Mar '20 pro-forma

new disposal

of about

-57%

800mln/€ SMEs

bad loans to

-51%

be completed

13.7

in 2020

GROSS NPEs

9.5

(bln/€)

6.7

5.9

6.8

Sept '15

Mar '19

Dec' 19

Mar '20

Mar '20 pro-forma

13

Confirmed strength of internal work-out units resulting in higher recovery rates

CASH-IN AND BACK TO PERFORMING

2016

2017

2018

2019

1Q19

1Q20

(A) RECOVERY RATE NPE (cash-in)*

8.1%

8.3%

8.9%

7.8%

8.7%

9.1%

Total cash-in and

(B) BACK TO PERFORMING**

2.7%

2.4%

3.0%

3.9%

3.3%

3.4%

back to performing

(A+B) RECOVERY RATE NPE (cash-in)

10.7%

10.7%

11.8%

11.7%

11.9%

12.5%

at 12.5% in 1Q20

+BACK TO PERFORMING

Recovery rate on

bad loans

improving further

to 7.1%

FOCUS BAD LOANS

2016

2017

2018

2019

1Q19

1Q20

RECOVERY RATE BAD LOANS

4.5%

4.6%

5.2%

6.5%

6.1%

7.1%

* Recovery rate = payments received / (initial NPE gross exposure + total increases), annualised

14

** Back to performing = NPE back to performing loans / (initial NPE gross exposure + total increase), annualised

Cost of Risk in 1Q20 at 73bps including higher provisioning on UTP loans in sectors more impacted by the Covid19 emergency

Coverage consistent with a highly secured portfolio

1Q 20

FY19 1Q 19

COST OF RISK

  • 73 bps inlcluding significant additional provisions on UTPs in sectors impacted by the Covid19 (bringing coverage on those sectors' UTPs to approx. 35%)
  • 87 bps of which 20 bps related to massive disposals
  • 59 bps (does not include the new definition of default introduced in July 2019)

% OF GROSS NPEs SECURED*

85%

79%

77%

71%

70%

(REAL ESTATE COLLATERAL + CASH COVERAGE) / TOTAL GROSS NPEs*

81%

79%

78%

75%

75%

COVERAGE PERFORMING LOANS**

0.69%

0.55%

0.41%

0.36%

0.30%

UBI

BPER BancoBPM Intesa SP Unicredit

UBI

BPER Unicredit Intesa SP BancoBPM

Unicredit

UBI Intesa SP BancoBPM BPER

*Data as at 31 December 2019, Table A.3.2 financial reports and Company presentations

15 ** Data as at 31 March 2020

CET1 ratio at 12.9%

No future DTAs or optimisation actions included

Capital Ratios Fully Loaded

No future DTAs nor optimisation manoeuvres included

Already above Business

Total Capital + SNP

Plan expectations

19.6%

19.6%: important

• MDA buffer (CET1): 361 bps (vs Srep

protection for

+57 bps

12.86%

12.29%

Dec '19 Mar '20

CET1

+122 bps

17.05%

15.83%

Dec '19 Mar '20

Total Capital

9.25%)

holders of Senior

SNP

2.6%

• MDA buffer (CET1): 459 bps (in the

Preferred Bonds

hypothesis of full application of art.

Tier 2

3.5%

104a CRD5)

AT1

0.7%

Both including or excluding 2019

dividend

CET1

12.9%

MDA buffer (CET1) > 330 bps*

CET1 ratio > 12.5%

  • In 1Q20 impacts on CET1 ratio from:
    • Dividend accrued for 2019 and not resolved by the General Shareholders' meeting following ECB recommendation (+26bps)
    • Change in real estate valuation criteria (+38 bps, higher than Business Plan expectations)
    • OCI reserve (-25 bps) and impact of TRIM inspections
    • Net 1Q20 profit positive contribution with dividend accrual according to Business Plan projections

Further positive effect on Total Capital ratio from 400 mln AT1 issued in Jan '20

* Average estimate in the span of Business Plan (2020-2022)

16 SREP 2019: CET1 requirement 9.25%; Total Capital Requirement: 10.25% (12.75% including the Capital Conservation Buffer). 2020 SREP unchanged vs 2019 See Annex 10 for further detail

Business Outlook

  • The Covid19 emergency is a crisis that is different from others both because of how it originated and how it might develop, which makes any type of forecast complex. However, even in this crisis, the key factor is the quality of credit. In the face of this unprecedented crisis, swifter and more incisive measures were taken by domestic and international authorities to mitigate its impact.
  • These measures, recently implemented, should allow the Bank to preserve its level of net interest income. Weaker performance by the fee and commission component relating to transactions following the slowdown in the economy is expected, while the fee and commission component relating to assets under management will be affected by the crisis in the first part of the year, but will depend on the performance of markets in the second.
  • Maximum efforts will continue to be made to contain operating expenses, although in a different manner, driven by smartworking.
  • As concerns loan losses, these will be higher than forecast for the first year under the Business Plan, although mitigated by the use of support initiatives included in the mentioned recent measures. The Bank has already made greater provisions for unlikely-to-pay loans in those sectors more exposed to the crisis with an impact on 1Q 2020 of about 50 million (with an overall cost of credit of 73 bps), and it will focus its attention during the year on these loans, given the high quality of performing loans (the level of high-risk performing loans fell further in 1Q 2020 to 2.7%, the default rate is expected to remain low and coverage for performing loans is among the highest for major Italian banks). The internal workout strategy for non-performing loans is therefore confirmed.
  • From a balance sheet viewpoint, the UBI Group's capital position, its solid liquidity and its asset quality enables it to face this crisis with a reasonable level of confidence, as already occurred in previous crisis, and to generate profits on a continuing basis to the benefit of all stakeholders (including dividends when authorised by the ECB).

17

Annexes

18

Annex 1a

Reclassified consolidated Income Statement (restated to reflect the change in real estate measurement criteria)

(mln/€)

Net interest income

  • of which: TLTRO2
  • of which: credit components (IFRS9 and PPA)
  • of which: IFRS9 contractual modifications without derecognition

Net fee and commission income

Net income (loss) from trading, hedging and disposal/repurchase activities and from assets/liabilities at fair value through profit or loss Profits of equity-accounted investees

Dividends and similar income

Net income from insurance operations Other net operating income/expense

Operating income

Staff costs

Other administrative expenses

of which: SRF and DGS contributions

Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets

Operating expenses

Operating expenses excluding SRF and DGS contributions

Net operating income

Net impairment losses for credit risk relating to:

  • financial assets measured at amortised cost: loans to banks
  • financial assets measured at amortised cost: loans and advances to customers
  • financial assets measured at amortised cost: securities
  • financial assets as at fair value through other comprehensive income

Net provisions for risks and charges - commitments and guarantees granted

Net provisions for risks and charges - other net provisions

Profits (losses) from the disposal of equity investments

Net income (loss) from fair value change in property, plant and equipment and intangible assets

Pre-tax profit from continuing operations

Taxes on income for the period from continuing operations

Profits/losses for the period attributable to non-controlling interests

Profit for the period attributable to the Parent before Business Plan and other impacts

Redundancy expenses net of taxes and non-controlling interests

Business Plan Project expenses net of taxes and non-controlling interests

Impairment losses on property, plant and equipment

Profit for the period

Profit for the period net of non-recurring items

1Q19 4Q19 (restated) (restated)

445.6 412.0

12.411.1

31.221.4

(5.2)(11.9)

  1. 446.3
  1. 58.2
  1. 9.1

5.20.1

  1. 4.0
  1. 18.8
  1. 948.5

(364.4) (355.5)

(186.0) (162.7)

(42.0) (4.4)

(52.5) (58.5)

(603.0) (576.7)

(561.0) (572.2)

317.7 371.9

(130.0) (210.5)

(0.0)(0.3)

(128.6) (208.2)

(0.5)(1.4)

(0.9)(0.6)

(0.6) (1.9)

(3.5) (1.2)

  1. 1.8

- (39.4)

  1. 120.6

(51.4) (22.5)

(6.4) (13.0)

  1. 85.2
    (42.6) (46.8)
    (0.1)
    (0.3)
  1. 38.1

126.1 83.9

1Q20

405.2

10.1

20.1

(8.8)

420.5

53.6

7.8

4.8

2.5

19.3

913.6

(355.0)

(181.4)

(42.0)

(57.2)

(593.6)

(551.6)

320.0

(157.1)

(0.2)

(155.6)

0.6

(1.9)

(0.9)

0.9

0.1

(8.7)

154.2

(52.4)

(8.3)

93.6

0.0

93.6

99.3

1Q20

1Q20

vs 1Q19

vs 4Q19

(9.1%)

(1.7%)

(18.4%)

(8.9%)

(35.6%)

(6.2%)

70.7%

(25.8%)

4.9%

(5.8%)

43.2%

(7.9%)

23.6%

(14.6%)

(7.6%)

n.s.

(28.6%)

(37.9%)

(11.0%)

2.5%

(0.8%)

(3.7%)

(2.6%)

(0.1%)

(2.5%)

11.5%

(0.0%)

n.s.

8.9%

(2.3%)

(1.6%)

2.9%

(1.7%)

(3.6%)

0.7%

(13.9%)

20.9%

(25.4%)

n.s.

(47.4%)

21.0%

(25.2%)

n.s.

n.s.

114.9%

211.1%

67.6%

(51.3%)

n.s.

n.s.

(75.5%)

(96.3%)

n.s.

n.s.

(16.1%)

27.9%

1.9%

133.1%

29.4%

(36.0%)

(25.8%)

9.8%

12.1%

145.8%

(21.2%)

18.4%

FY19

(restated)

1,725.1

48.7

110.6

(25.3)

1,661.8

104.3

40.3

7.7

15.3

83.5

3,637.9

(1,427.7)

(711.1)

(107.6)

(221.3)

(2,360.0)

(2,252.5)

1,277.9

(744.1)

0.1

(738.4)

(2.5)

(3.3)

(0.0)

(24.8)

6.1

(39.4)

475.7

(118.8)

(33.9)

323.0

(89.4)

(0.1)

(0.3)

233.1

331.3

19

Contribution of non-recurring items to Net Profit

Stated Net

2017-2020 Business Plan

Disposal of

First time application of

1Q20

securities/equity

measurement of

Profit

Staff leaving incentives

investments

properties at fair value

1Q20

93.6

(0.0)

(0.0)

5.8

P&L

(A)

Redundancy expenses net of

Net income from trading,

Net income (loss) from fair

reference line

taxes and non-controlling interests

hedging and disposal/

value change in property,

repurchase activities and

plant and equipment and

from assets/liabilities as at

intangible assets

fair value through profit or

loss

Annex 1b

Total impact of non-

Normalised

recurring items

Net Profit

5.8

99.3

(B)

(A+B)

The reference date for the first time application of

new evaluation criterion is 31/03/2020.

In short, the FTA impacts of the new evaluation

can be summarized as follows:

IAS

Change in FV vs FTA

Properties for operational use

Positive impact to equity

FTA

(pursuant to IAS 16)

Negative impact to income statement

Investment properties

Net impact to equity

(pursuant to IAS 40)

Note: items net of taxes and non-controlling interests

20

Annex 1c

Change in the measurement critera for real estate assets

The real estate assets of the UBI Banca Group include:

  • properties for operational use (pursuant to IAS 16)
  • investment properties (pursuant to IAS 40)

and also properties treated as "inventories" (pursuant to IAS 2).

The Group's accounting policies required both categories to be measured at cost (net of accumulated depreciation and any impairment). The UBI Group has decided to revalue the carrying amount of its real estate assets as of 31st March 2020.

This consists of making changes:

  • from measurement at cost to measurement at a "revalued amount" for properties held for operational use pursuant to IAS 16 (with impacts "on going" in the equity and income statement);
  • from measurement at cost to measurement at fair value for investment properties pursuant to IAS 40 (with impacts "on going" in the income statement).

In accordance with IAS 8 "Accounting policies, changes in accounting estimates, and errors", this change in the method of measurement constitutes a voluntary change in accounting policies for the following reasons:

  • to improve the quality of the information on which users of the financial statements bases their decisions;
  • to evaluate the real estate assets in order to reflect their market value based on the characteristics of the properties and on the market context, regardless of the timing and reasons for the acquisition of each individual property;
  • to improve the comparability of operating performance from year to year.

21

Annex 2

Change in the measurement criteria for real estate assets: impact on income statement

As of 31st March 2020 the UBI Group changed the criterion it uses to measure real estate assets, adopting the fair value criterion in place of that of cost. As a consequence of the above, the restated comparative periods differ from those published as at their respective reporting dates. In compliance with IAS 8, the comparative figures for previous periods have been restated following retrospective application of the change in the measurement criterion for real estate assets, subject to IAS 40 rules.

On the contrary, the change in the measurement criteria for operational real estate assets, pursuant to IAS 16, has been applied prospectively from 31st March 2020, in compliance with IAS 8.

Following the change in the measurement criteria for real estate assets, we report the following as of these financial statements:

  • the item "Property, plant and equipment" in the balance sheet includes measurement of "Operational properties" pursuant to IAS 16 and "Investment property" pursuant to IAS 40, at the
    "revalued amount" and at "fair value" respectively;
  • the item "Depreciation and net impairment losses on property, plant and equipment and intangible assets" in the income statement includes, with regard real estate assets, only the depreciation of "Operational properties" since "Investment properties" measured at fair value are not depreciated;
  • the item "Net income (loss) from fair value change in property, plant and equipment and intangible assets" includes the result for changes in the fair value of properties in the period, in compliance with the new measurement criteria adopted.

It follows that the figures reported are comparable with previous periods except for the item "Property, plant and equipment" in the balance sheet and the item "Net income (loss) from fair value change in property, plant and equipment and intangible assets" in the income statement.

2019

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Figures in thousands of euro

restatement

restatement

restatement

restatement

impacts

impacts

impacts

impacts

Operating income

-

-

-

-

190. a) Staff costs

190. b)

Other administrative expenses

of which: SRF and DGS contributions

Depreciation, amortisation and net impairment losses on property, plant and

210.+220.

equipment and intangible assets

2,590

2,212

1,851

1,809

Operating expenses

2,590

2,212

1,851

1,809

Net operating income

2,590

2,212

1,851

1,809

130. Net impairment losses for credit risk relating to:

130. a) - financial assets measured at amortised cost: loans and advances to banks

130. a) - financial assets measured at amortised cost: loans and advances to customers

  1. a) - financial assets measured at amortised cost: securities
  1. b) - financial assets measured at fair value through other comprehensive income
  1. a) Net provisions for risks and charges - commitments and guarantees granted

200. b) Net provisions for risks and charges - other net provisions

Net income (loss) from fair value change in property, plant and equipment and

260.

intangible assets

(39,386)

-

-

-

250.+280.

Profits (losses) from the disposal of equity investments

290.

Profit (loss) before tax from continuing operations

(36,796)

2,212

1,851

1,809

300.

Taxes on income for the period from continuing operations

11,289

(715)

(595)

(582)

340. (Profit) loss for the period attributable to minority interests

Profit (loss) for the period attributable to the

shareholders of the Parent

before the Business Plan and other impacts

(25,507)

1,497

1,256

1,227

190. a) Redundancy expenses net of taxes and minority interests

190. b) Business Plan project expenses net of taxes and minority interests

Depreciation and net impairment losses on property, plant and equipment net of

210.

taxes and minority interests

3,432

350.

Profit (loss) for the period attributable to the shareholders of the Parent

(22,075)

1,497

1,256

1,227

22

Annex 3a

Branches and headcounts evolution

# of domestic branches (end of period)

>2,000

1,838

o/w 1,524

1,648

1,638

1,636

1,575

1,566

UBI Banca Group

Stand alone

Dec '16

Dec '17

Dec '18

June '19

Sept '19

Dec '19

Mar '20

pro-forma*

  • of headcounts (end of period)

22,500

On 14th January trade union agreement signed for

21,412

the exit, on a voluntary basis, of over 300 resources

o/w 17,560

20,394

20,241

20,128

19,940

as from Feb 2020

UBI Banca Group

19,629

Stand alone

Approx. 133 resources still to exit from end March

2020

Dec '16

Dec '17

Dec '18

June '19

Sept '19

Dec '19

Mar '20

pro-forma*

  • Dec '16 pro-forma and FY2016 pro-forma include UBI Banca Group Stand Alone + data of 3 Banks acquired in May 2017

23

Detail of Operating costs

Annex 3b

o/w Staff Costs

(mln/€)

364

356

352

355

355

1Q19 2Q19 3Q19 4Q19 1Q20

-2.6%

Number of staff decreases by 311 employees vs Dec '19 and by 757 vs March '19

24

o/w Admin. Expenses

(mln/€)

186 175 187 163 181

RF: 42

RF: 18

DGS:

DGS:

4

RF: 42

43

144

157

144

158

139

1Q19

2Q19

3Q19

4Q19

1Q20

o/w Depreciation, Amortisation, etc.

(mln/€)

52

54

56

59

57

1Q19 2Q19 3Q19 4Q19 1Q20

Annex 4a

Reclassified Consolidated Balance Sheet - Assets (restated to reflect the change in real estate measurement criteria)

31.03.2020

31.12.2019

Changes

% changes

31.03.2019

Changes

% changes

restated

restated

A

A-B

A/B

A-C

A/C

Figures in thousands of euro

B

C

ASSETS

10.

Cash and cash equivalents

543,344

694,750

(151,406)

(21.8%)

606,459

(63,115)

(10.4%)

20.

Financial assets measured at fair value through profit or loss

2,445,729

1,758,730

686,999

39.1%

1,504,110

941,619

62.6%

1)

Loans and advances to bank s

16,875

16,213

662

4.1%

14,715

2,160

14.7%

2)

Loans and advances to customers

275,614

260,667

14,947

5.7%

270,459

5,155

1.9%

3)

Securities and derivatives

2,153,240

1,481,850

671,390

45.3%

1,218,936

934,304

76.6%

Financial assets measured at fair value through other

30.

comprehensive income

11,476,015

12,221,616

(745,601)

(6.1%)

11,237,472

238,543

2.1%

1)

Loans and advances to bank s

-

-

-

-

-

-

-

2)

Loans and advances to customers

-

-

-

-

15

(15)

(100.0%)

3)

Securities

11,476,015

12,221,616

(745,601)

(6.1%)

11,237,457

238,558

2.1%

40.

Financial assets measured at amortised cost

101,689,225

101,736,289

(47,064)

-

103,161,917

(1,472,692)

(1.4%)

1)

Loans and advances to bank s

9,467,195

11,723,923

(2,256,728)

(19.2%)

11,327,078

(1,859,883)

(16.4%)

2)

Loans and advances to customers

85,778,114

84,564,033

1,214,081

1.4%

87,095,528

(1,317,414)

(1.5%)

3)

Securities

6,443,916

5,448,333

995,583

18.3%

4,739,311

1,704,605

36.0%

50.

Hedging derivatives

34,039

35,117

(1,078)

(3.1%)

20,298

13,741

67.7%

60.

Fair value change in hedged financial assets (+/-)

651,581

547,019

104,562

19.1%

320,370

331,211

103.4%

70.

Equity investments

293,676

287,353

6,323

2.2%

263,307

30,369

11.5%

80.

Technical reserves of reinsurers

104

-

104

-

-

104

-

90.

Property, plant and equipment

2,590,524

2,370,247

220,277

9.3%

2,492,994

97,530

3.9%

100.

Intangible assets

1,731,379

1,739,903

(8,524)

(0.5%)

1,721,712

9,667

0.6%

of which: goodwill

1,465,260

1,465,260

-

-

1,465,260

-

-

110.

Tax assets

3,748,151

3,755,895

(7,744)

(0.2%)

4,123,686

(375,535)

(9.1%)

120.

Non-current assets and disposal groups held for sale

291,766

268,100

23,666

8.8%

10,320

281,446

n.s.

130.

Other assets

997,059

1,200,966

(203,907)

(17.0%)

1,357,159

(360,100)

(26.5%)

Total assets

126,492,592

126,615,985

(123,393)

(0.1%)

126,819,804

(327,212)

(0.3%)

25

Annex 4b

Reclassified Consolidated Balance Sheet - Liabilities and Equity (restated to reflect the change real estate measurement criteria)

31.03.2020

31.12.2019

Changes

% changes

31.03.2019

Changes

% changes

restated

restated

A

A-B

A/B

A-C

A/C

Figures in thousands of euro

B

C

LIABILITIES AND EQUITY

10.

Financial liabilities measured at amortised cost

108,386,682

109,795,016

(1,408,334)

(1.3%)

111,409,557

(3,022,875)

(2.7%)

a) Due to bank s

14,497,500

14,367,985

129,515

0.9%

17,776,512

(3,279,012)

(18.4%)

b) Due to customers

71,435,696

72,577,255

(1,141,559)

(1.6%)

69,830,403

1,605,293

2.3%

c) Debt securities issued

22,453,486

22,849,776

(396,290)

(1.7%)

23,802,642

(1,349,156)

(5.7%)

20.

Financial liabilities held for trading

617,709

555,296

62,413

11.2%

461,254

156,455

33.9%

30.

Financial liabilities designated at fair value

285,439

197,610

87,829

44.4%

124,296

161,143

129.6%

40.

Hedging derivatives

575,925

386,778

189,147

48.9%

107,022

468,903

n.s.

50.

Fair value change in hedged financial liabilities (+/-)

156,033

145,191

10,842

7.5%

124,767

31,266

25.1%

60.

Tax liabilities

300,268

210,882

89,386

42.4%

196,528

103,740

52.8%

70.

Liabilities associated with assets held for sale

-

2,331

(2,331)

(100.0%)

-

-

-

80.

Other liabilities

3,145,785

2,735,807

409,978

15.0%

2,271,216

874,569

38.5%

90.

Provision for post-employment benefits

264,793

289,641

(24,848)

(8.6%)

307,910

(43,117)

(14.0%)

100.

Provisions for risks and charges:

448,535

489,485

(40,950)

(8.4%)

495,298

(46,763)

(9.4%)

a) commitments and guarantees granted

54,255

54,005

250

0.5%

54,026

229

0.4%

b) pension and similar obligations

85,035

86,756

(1,721)

(2.0%)

87,111

(2,076)

(2.4%)

c) other provisions for risk s and charges

309,245

348,724

(39,479)

(11.3%)

354,161

(44,916)

(12.7%)

110.

Technical reserves

2,149,201

2,210,294

(61,093)

(2.8%)

1,962,495

186,706

9.5%

120.+150.+160.

Share capital, share premiums, reserves, valuation reserves

+170.+180

and treasury shares

10,002,121

9,306,321

695,800

7.5%

9,243,950

758,171

8.2%

190.

Minority interests (+/-)

66,529

58,230

8,299

14.3%

32,076

34,453

107.4%

200.

Profit (loss) for the period/year (+/-)

93,572

233,103

(139,531)

(59.9%)

83,435

10,137

12.1%

Total liabilities and equity

126,492,592

126,615,985

(123,393)

(0.1%)

126,819,804

(327,212)

(0.3%)

26

Annex 5

Direct funding at over 94 bln/€: a slight decrease in corporate current account and deposits Indirect funding at 92.2 bln/€, -0.5% vs Dec '19 when excluding market performance

bln/€

31 Mar '19

31 Dec '19

31 Mar '20

...from ORDINARY CUSTOMERS

75.75

76.88

75.54

of which

Current accounts and deposits

65.66

69.04

67.95

Term deposits, financing & other payables

2.32

2.38

2.48

Leasing payables

0.40

0.39

0.38

Bonds issued

7.09

4.93

4.64

Certificates of deposit

0.27

0.13

0.08

…from INSTITUTIONAL CUSTOMERS

17.89

18.64

18.51

of which

Covered Bonds

13.02

10.57

10.54

EMTN

3.42

7.21

7.19

Repos with CCG and other

1.45

0.85

0.78

TOTAL DIRECT FUNDING

93.63

95.51

94.05

AuM

43.50

45.83

41.22

Bancassurance

25.52

27.26

27.08

AuC

29.75

28.36

23.95

TOTAL INDIRECT FUNDING

98.77

101.45

92.24

  • Current accounts and deposits in Mar '20: decrease (-1.6% vs Dec '19), mainly due to strategy to reduce corporate deposits, lowering balance with ECB
  • Indirect funding: all items impacted by market performance effect
    • AUM (net of insurance) down by 10,1% but +0,3% net of performance effect
    • AUC down by 15,6% (-3,9% net of performance effect, following the exit of one large position)
    • Insurance products substantially unvaried (+1,5% net of performance effect
  • Repurchases not included

27 ** Please see annex 6 for the main list of issuances placed in 2019 and 2020

Evolution of the Group's Financial Assets

Financial Assets (Securities*, in bln/€)

21.95

20.07

17.20

19.15

9.53

15.64

8.38

8.28

1.40

1.44

1.24

0.97

7.68

9.37

9.10

5.34

Dec' 16**

Mar '19

Dec '19

Mar '20

Focus on Italian Govies (Incidence on total financial assets)

75.7%

55.4%

51.1%

54.6%

Dec '16

Mar '19

Dec '19

Mar '20

Annex 6

Italian Govies excluding insurance portfolio

Modest increase due to purchase of short term bonds to invest liquidity and on the trading book

Italian Govies insurance portfolio

o/w main changes Mar '20 vs Dec '19:

Euro Area govies:

+1.2 bln/€

Corporate bonds:

-1.3 bln/€

Emerging markets:

-0.1 bln/€

o/w main changes Mar '20 vs Mar '19:

Euro Area govies:

+1.3 bln/€

Corporate bonds:

-0.5 bln/€

Equity securities/ UCITS:

+0.1 bln/€

28

*

Includes reclassified balance sheet items 20.3) , 30.3) and 40.3)

**

Dec '16 aggregate includes UBI Banca Group Stand Alone (17,859 mln/€) + data of 3 Banks acquired in May 2017

Annex 7

Financial assets proprietary portfolio breakdown: Italian Govies maturities and main exposures

31 DECEMBER 2019

FVTPL

FVOCI

AC

(fair value through

(financial

(fair value

TOTAL

Amounts in mln/€

other

assets at

through profit or

comprehensive

amortised

loss)

income)

cost)

Financial Assets

1,482

12,222

5,448

19,152

(Securities and

derivatives*)

o/w Italian Govies

9

5,520

4,258

9,787

Financial Liabilities held for trading

469

Maturity of the Italian Govies Portfolio

Amounts in mln/€

FVTPL

FVOCI

AC

TOTAL

TOTAL

31.03.20

31.12.19

2020

328

1

-

329

16

2021-2022

350

131

459

940

835

2023-2025

4

2,562

703

3,269

3,305

2026-2030

-

1,561

2,268

3,829

3,133

From 2031 and over

-

550

2,051

2,601

2,497

Total portfolio

682

4,804

5,482

10,969

9,787

% of portfolio on

6.2%

43.8%

50.0%

100%

total Italian Govies

31 MARCH 2020

% Change

FVTPL

FVOCI

AC

(fair value through

(financial

of TOTAL

(fair value

other

assets at

TOTAL

amounts

through profit or

comprehensive

amortised

loss)

income)

cost)

2,153

11,476

6,444

20,073

4.8%

682

4,804

5,482

10,969

12.1%

Financial Liabilities held for trading

541

Main exposures as at 31 March 2020

Portfolio:

Consolidated

o/w

Insurance

Amounts in bln/€

o/w Govies

o/w Corporates

o/w Loans

Govies

and banks

Italy

10,969

1,134

631

1,441

Spain

2,044

77

275

USA

1,765

105

1

France

952

116

31

Main 4 countries

15,730

1,432

631

1,748

% on total amount

93.9%

73.3%

96.8%

96.5%

* The analysis excludes equity securities (0.4 bln/€) and UCITs (0.6 bln/€)

29

Annex 8

Liquidity resources at 36.8 bln/€ (31/03/2020)

(i.e. over 50% of current accounts and deposits)

Destination (amounts in €/bln)

Excess Liquidity on ECB Account

Unencumbered

23.8

5.8 bln/€

36.8 bln/€

Pledged to ECB*

10.3

Eligible assets (net of haircut)

Repos and other

2.7

31.0 bln/€

(mainly CCG)

Composition of eligible assets (net of haircut)

Italian Govies

31%

Foreign Govies

11%

Retained covered bonds

16%

Retained securitisation

14%

ABACO (credit claims)

19%

Other (mainly CCG repos)

9%

* Following the 1.5bn/€ reimbursement in September 2019, UBI Banca proceeded in December 2019 with the early repayment of a further 1 bln/€ TLTRO2, which now amount to nominal

30 7.5 bln/€ currently outstanding with expiry date 24 June 2020. As a result, the residual TLTRO2 total exposure amounts now to 10 bln/€, including also nominal 2.5 bln/€ expiring on 24 March 2021.

Annex 9

NPEs coverage up 56bps vs December 2019

High collective provisions on Stage 1 and 2 loans

LOANS TO CUSTOMERS AT AMORTISED COST (31 MARCH '20)

bln/€

Gross exposure

Impairment

Carrying amount

Coverage

losses

NPEs

(7.5%)

6.67

2.64

(4.7%)

4.03

39.56%

- Bad loans

(3.8%)

3.41

1.76

(1.9%)

1.66

51.51%

- UTPs

(3.5%)

3.15

0.87

(2.7%)

2.28

27.65%

- Past-due loans

(0.1%)

0.10

0.01

(0.1%)

0.10

8.58%

Performing loans

(92.5%)

82.20

0.45

(95.3%)

81.74

0.55%

TOTAL

88.87

3.09

85.78

3.48%

LOANS TO CUSTOMERS AT AMORTISED COST (31 DECEMBER '19)

mln/€

Gross exposure

Impairment

Carrying amount

Coverage

losses

NPEs

(7.8%)

6.84

2.67

(4.9%)

4.17

39.00%

- Bad loans

(4.1%)

3.55

1.85

(2.0%)

1.71

51.98%

- UTPs

(3.6%)

3.17

0.81

(2.8%)

2.36

25.52%

- Past-due loans

(0.1%)

0.11

0.00

(0.1%)

0.10

8.33%

Performing loans

(92.2%)

80.85

0.46

(95.1%)

80.39

0.57%

TOTAL

87.69

3.13

84.56

3.57%

Coverage with write- offs

52.03%

67.66%

Coverage

with write-

offs

50.92%

67.12%

  • Reduction in gross NPEs stock: -2.4% vs Dec '19 and -29.4% vs Mar '19
  • Reduction in net NPEs stock: -3.3% vs Dec '19 and -30% vs Mar '19

31

Annex 10

Capital Ratios as at 31 March'19.

Common Equity Tier 1 phased in ratio at 12.90%, Total Capital phased in ratio at 17.08%

m ln/€

Dec '19

Mar '20

Common Equity Tier 1

7,254.6

7,572.6

(after filters)

Common Equity Tier 1 regulatory adjustments

-89.4

-75.0

of which negative elements for deduction excess of expected losses

-84.5

-13.4

over impairment losses

Common Equity Tier 1 Capital (CET1)

7,165.2

7,497.6

Additional Tier 1 before deductions

-

397.9

Additional Tier 1 regulatory adjustments

-

-

of which negative elements for deduction excess of expected losses

-

-

over impairment losses

mln/€

Dec '19

Mar '20

Risk weighted assets

58,086.3

58,143.1

Total prudential requirements

4,646.9

4,651.5

Credit risk

4,240.2

4,238.2

CVA (Credit Value Adjustment) risk

3.8

4.1

Market risk

81.0

87.3

Operational risk

321.9

321.9

CET 1 ratio

TOTAL CAPITAL ratio

Additional Tier 1

-

397.9

Tier 1 Capital (CET 1 +Additional Tier 1)

7,165.2

7,895.5

Dec '19

Mar '20

PHASED - IN 12.34%

12.90%

Dec '19

Mar '20

PHASED - IN 15.88%

17.08%

Tier 2 Capital before transitional provisions

Tier 2 instruments grandfathering

Tier 2 Capital after transitional provisions

2,114.6 2,094.5

--

2,114.6 2,094.5

FULLY

12.29%

12.86%

LOADED

FULLY

15.83%

17.05%

LOADED

Tier 2 capital regulatory adjustments

of which: negative elements for deduction excess of expected losses over impairment losses

-58.4-58.0

--

B3 Leverage ratios as at 31 Mar'20:

phased in 5.89% (5.44% in Dec '19)

fully loaded 5.87% (5.42% Dec '19)

Tier 2 Capital

2,056.2

2,036.5

TOTAL OWN FUNDS

9,221.4

9,932.1

LCR and NSFR > 100%

(also excluding TLTRO2)

32

Annex 11

Issuances in 2020

20th January 2020

  • AT 1 bondissuance on the wholesale market for a total 400mln/€ amount
  • Thanks to the huge total amount of the orders received from approximately 450 institutional investors (over €6 billion), the initial coupon guidance, announced at around 6.5%, was reviewed downwards by 0.625% and the final coupon was set at 5.875% for the first five and a half years.
  • The coupon is payable half-yearly in arrears on 20th June and 20th December of each year starting from 20th June 2020 (first coupon is short).The re-offer price is 100.

Allocation by

Allocation by

Investor Geography

Investor Type

Others,

Pension/I

Others ;

18%

nsurance;

3%

UK&Ireland

Hedge 5%

; 29%

Funds;

10%

Asia; 7%

Italy 8%

Banks;

16%

France;

Fund

Switzerland

Germany&

18%

Managers

; 10%

Austria;

66%

10%

33

Attachments

Disclaimer

UBI Banca – Unione di Banche Italiane Scpa published this content on 08 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2020 15:13:05 UTC