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2005 GROUP RESULTS Alessandro Profumo - CEO. Milan, March 22 nd 2006. AGENDA. 2005 UCI Group Consolidated Results. UCI Group: Key Highlights. UCI Standalone 2005 Results. HVB Group 2005 Results. First Integration Achievements. Annexes. - PowerPoint PPT Presentation
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2005 GROUP RESULTS
Alessandro Profumo - CEO
Milan, March 22nd 2006
2
AGENDA
2005 UCI Group Consolidated Results
First Integration Achievements
Annexes
UCI Standalone 2005 Results
HVB Group 2005 Results
UCI Group: Key Highlights
3
SOLID PRO-FORMA(1) RESULTS SUPPORTED BY THE GOOD Y/Y PERFORMANCES OF BOTH UCI GROUP AND HVB GROUP STANDALONE
Normalized(2) net income at 3,808 mln, thanks to the good performance of the standalone Groups:
UCI standalone at 2,573(2) mln, +24.4% y/y(3)
HVB standalone at 1,162 mln(4), +137.3% y/y
(1) Pro-forma P&L includes HVB Group standalone 12 month results and restructuring charges
Solid figures for the new Group, with pro-forma(1) net income at 3,383 mln (including pre-tax restructuring charges of 580 mln)
(3) IAS figures, 2004 excluding IAS 32 & 39
Pro-forma(1) EPS at 0.33 Euro, Normalized(2) EPS 0.37
Total revenues at 20,791 mln, with excellent growth in the main revenue lines
UCI standalone at 11,024 mln, +8.0% y/y(3)
HVB standalone at 9,697 mln, +8.2% y/y
Proposed DPS at 0.22 Euro (+7.3% y/y) for ordinary shares
2005 Core Tier 1 ratio at 5.52%, better than plan targets
(2) Excluding restructuring charges
Cost income at 62.3%, improving in both standalone Groups:
UCI standalone at 54.8% from 55.8% in 2004(3)
HVB standalone at 68.1% from 68.7% in 2004
(4) Excluding restructuring charges and general allowance to loan loass provisions
4(1) Including HVB Group standalone 2 month results, Integration effects and other one-off costs
(mln)2005 PRO FORMA(2)
OF WHICHHVB GROUP STNDALONE
OF WHICH UNICREDIT
STNDALONE
PURCHASE PRICE
ALLOCATION AND
ELISIONS
Pro-forma EPS, Euro 0.33
Proposed DPS, Euro 0.22
(3) Excluding integration effects
Normalised EPS(3), Euro 0.37
Normalised net profit for UCI Group(3) 1,1622,573 +733,808
2005 UCI GROUP
STATED (1)
Total revenues 9,69711,024 7020,79111,024
Operating expenses -6,608-6,045 -73-12,726-6,045
Gross operating profit 3,0894,979 -38,0654,979
Integration costs -546-177 +143-580-177
Consolidated net profit for UCI Group 6422,455 +2863,3832,470
Pre-tax profit 1,2994,068 +2365,6034,068
(2) Including HVB Group standalone 12 month results, Integration effects and other one-off costs
2005 GROUP PRO-FORMA NET INCOME AT 3,383 MLN GOOD CONTRIBUTION OF STANDALONE GROUPS IMPACTED BY INTEGRATION AND ONE-OFF CHARGES; PROPOSED DIVIDEND GROWING 7.3% Y/Y
5
RESTRUCTURING COSTS AND ADJUSTMENTS: 580 MLN NET IN 2005 AS THE ANNOUNCED 1,350 MLN COULD NOT BE ENTIRELY BOOKED IN YEAR ONE
Pre-tax and minorities (mln)
Restructuring costs after adjustments amount to 580 mln in 2005 P&L
Pre tax impact in FY05
Severance
Loan provisioning
TOTAL (gross of adj.)
490
147
870
Others 75
Restructuring costs: breakdown by typology(mln)
870 mln gross charges come mainly from: 490 mln severance costs 147 mln loan provisioning in HVB (77 mln) and BA-CA (70 mln) 158 mln impairments (mainly IT) 58 mln consultancies
Purchase price adjustments, related to fair value valuations in the new group opening balance sheet, have 290 mln pre-tax positive effects. The main items whose P&L impact is offset are:
147 mln loan provisioning 40 mln investment impairments 99 mln software impairments
(2) The adjustments are related to items which do not impact the consolidated net profit as they were already accounted for in the new group opening balance sheet
(1) In 2005 consolidated pro-forma P&L
The announced 1,350 mln charges could not be fully booked in 2005, due to delays in Poland and to IAS P&L recognition rules
HVB UCI(stand – alone)
BA-CA TOTAL
580
-290438
108
177
Adjustments(2)
870
Impairments 158
Restructuring costs and adjustments(1): breakdown by Group
147
One-off provisions
546
6
CREATION OF A BIG EUROPEAN PLAYER WITH CRITICAL MASS IN ALL KEY AREAS
DIRECT DEPOSITS BRANCHES EMPLOYEES
UCI HVBo/w
BACA
178.1284.1
GROUP
462.2
106.1
UCI HVBo/w
BACA
4,880
2,304
GROUP
7,184
1,570
UCI HVBo/w
BACA
71,470 61,447
GROUP
132,917(1)
33,001
(1) “Full time equivalent”, KFS and YKB employees consolidated pro-quota
UCI HVBo/w
BACA
LOANS (bn) RWA
160.5266.1
AUM
GROUP
426.6
112.8
UCI HVBo/w
BACA
172.4246.2
GROUP
418.6
75.2
UCI HVBo/w
BACA
157.0114.7
GROUP
271.7
35.5
7
ALL SOLVENCY RATIOS WELL ABOVE 2005 PLAN TARGETS; 2006 CORE TIER 1 TARGET (6%) FULLY ACHIEVABLE
(1) Plan Targets based on M&A “Main” Case scenario – All share acquisitions with 100% acceptance levels
Tier 1 ratio (%) 6.89%
Total Capital ratio (%) 10.33%
2005
TOTAL RWA (bn) 418.6
5.7%Marginal RARORAC (%)(3)
Core Tier 1 ratio (%) 5.52%
6.22%
10.11%
2005Plan(1)
Targets
433.4
5.30%
Core Capital (bn) 23.1 22.9
(2) Already deducted from Core Capital
Total RWAs lower than planned mainly thanks to:
Reduced real-estate collateralized credit exposure for HVB Group
Significantly reduced market risks for HVB due to the adoption of the advanced internal model
Dynamic Capital Management: capital generating actions carried out by the New Group (e.g. Locat securitization, partial disposal of Munich Re holding, continued pruning of investment portfolio)
Core TIER 1 ratio well above Plan estimates, while adopting a prudent approach on deferred tax assets of 1.7 bn, not reflected in capital
6% Core TIER 1 ratio target as of year-end 2006 fully confirmed, thanks to: organic earning generation
additional capital generating actions (e.g. disposal of Securities Service business, Splitska Banka)
15.6%ROE (stated, %)
(3) Calculated on pro-forma net income (HVB Group consolidated for 12 months)
8
AGENDA
2005 UCI Group Consolidated Results
Annexes
HVB Group 2005 Results
UCI Group: Key Highlights
First Integration Achievements
UCI Standalone 2005 Results
9
UCI STANDALONE: QUALITY RESULTS WITH STRONG P&L AND VOLUME GROWTH
UCI standalone (excluding HVB and restructuring charges) net income at 2,573 mln, growing significantly +24.4% y/y
Further strengthening of Group market positioning especially in asset management (market share at 15.57%, +103 bp y/y)
Revenues up 8.0% y/y to 11,024 mln, thanks to the brilliant performance of net interest income (+10.6%) and net commissions (+12.0%)
Good improvement in cost income ratio, down 104 bp y/y to 54.8% and operating expenses up by only 2.3% y/y(1)
Significant volume expansion: loans +14.4%, with good growth in all the divisions
Operating income up 10.6% y/y, thanks to strong contribution by all divisions:
Retail +24.0%
Corporate & Investment Banking +4.1% (10.8% ex derivatives)
New Europe +19.4%
Private & AM +29.9%
(1) At constant FX and perimeter; excluding non recurring items not related to the integration
10
UCI STANDALONE 2005 KEY HIGHLIGHTS: DOUBLE DIGIT GROWTH IN OPERATING INCOME DRIVEN BY A SOLID REVENUE INCREASE
IAS mln
57 bp
FY05
Cost of Risk(2), bp
FY05
4Q05% ch. on 4Q04(1)
Total Revenues 11,024 2,794 +8.3%+8.0%
2,573Net Income 456 +8.8%+24.4%
-7 bp
Operating Income 4,979 1,170 +2.9%+10.6%
Ch. on FY04(1)
54.8%C/I Ratio, % 58.1% +2.2 pp-1.1 pp
y/y % ch.(1)
0.41EPS(4) (Euro) +24.2%
(1) 4Q04 & FY04 excluding IAS 32 & 39
(3) Net Income of UCI standalone / period average net equity (excluding revaluation reserves, dividends related to the previous year and impacts of HVB acquisition
(2) Net loan loss provisions / net customer loans at year end
19.0%ROE(3) +3.3 pp
(4) Calculated as the ratio between net Income of UCI standalone and the number of shares pre capital increase due to HVB deal
Figures without integration costs & HVB impact
11
NET INTEREST INCOME GOOD PERFORMANCE WITH ACCELERATION IN LAST QUARTER ALSO THANKS TO YAPI ACQUISITION
NET INTEREST INCOME excl. Dividends (mln)
1Q05
New Europe
Italy
1,293
1,006
287
2Q05
1,293
991
302
1,375
1,056
319
3Q05
Comments on quarterly trend
Italy: growth mainly driven by spread effect, with volume effect substantially stable
Retail: good increase of deposit spread benefiting from market rates rise
Corporate: UBI benefiting from better deposit spread, while lending volume effect is negative
New Europe(1): +4.0% at unchanged FX excluding positive one-off effects accounted in 3Q05, with relevant volume growth (+7.1% at unchanged FX vs. Sep 05)
1,433
1,070
363
4Q05
+4.2%
+1.3%
+13.8%
Q/Q % ch.
5,394
4,122
1,272
FY05
+10.6%
+8.0%
+19.8%
Y/Y % ch.
(1) Excluding Yapi First Time Consolidation effects
12
INCREASED LENDING VOLUMES IN ALL DIVISIONS AND GROWING MARKET SHARES
5.014.4 20.9
5.2
DEC 04
10.83%
11.05%
Retail: loan growth (+14.5% y/y) driven by mortgages, consumer credit and small business
Corporate: up 9.3% y/y with good contribution of m/l term (+10.7% (2) vs Dec 04)
New Europe: +23.2% y/y at unchanged FX excluding Yapi, with good growth in all banks (i.e. Pekao
+10.2%, Zaba +21.8%)
(1) Data as of January, 1st 2005, including IAS 32-39 application(2) Source: Bank of Italy Matrix (Total Loans net of NPLs and Repos)
DEC 05(3)
On total loans 10.59%
On M/L term loans 10.81%
160.5
Corporate & IB
New Europe
DEC 04(1) DEC 05
139.7
Retail
65.7
62.6
71.8
+14.9%
Other
54.6
% ch. vs SEP 05
+5.4%
+21.8%
+4.3%
+1.8%
+12.8%
TOTAL CUSTOMER LOANS (IAS, bn)
UCI LENDING MARKET SHARES(2) IN ITALY
Excluding 4.7 bn securitisation, market shares would be:
10.94% (+11 bp on Dec 04) on total loans
11.13% (+8 bp on Dec 04) on M/L term loans
(3) Including the effects of 4.7 bn securitisation (UCB mortgages + Locat short term loans)
17.1
4.6
152.3
SEP 05
60.0
70.6
SEP 05(3)
10.77%
10.85%
Excluding Yapi Kredi
+9.1%
+5.0%
13
(4) Net commissions on segregated accountsand on management of collective investment funds
Excl. one-off on tax collection(1)
in 3Q05
+14.0%+9.7%
(1) 23 mln one-off tax collection fees accounted in 3Q05 but related to 1H05
NET COMMISSIONS ACCELERATING QUARTER BY QUARTER TO REACH THE HIGHEST EVER RESULT IN UNICREDIT HISTORY IN 4Q05
NET COMMISSIONS (mln)
(2) Corporate finance + Equity capital market + Debt capital market
1Q05
1,026
2Q05
1,071 1,113
3Q05
1,163
4Q05
+4.4%
Q/Q % ch.
4,373
FY05
+12%
Y/Y % ch.
FY05/FY04 growth key drivers: Fees on asset management products: +18.7%(4) (+262 mln to 1,661 mln, o/w +20 mln performance
fees, growing by 56% y/y thanks to buoyant market conditions) Corporate Division(3): foreign-trade (+17 mln), investment banking(2) (+68 mln) and transaction
services (+6 mln)
4Q05 net commissions increase by 50 mln q/q, +4.4% vis-à-vis outstanding 3Q05 results (+6.7% excluding one-off(1)), mainly thanks to fees on investment banking(2,3) (+18 mln), on foreign-trade & transaction services(3) (+6 mln) and on asset management products(4) (+15 mln to 453 mln in 4Q05)
(3) Managerial accounts in ITAS
New Europe
Other
143 148 161 202 +25.6% 654 +18.6%
Excluding Yapi Kredi
+0.8% +10.9%
+3.4%
+11.3%+2.1%
14
STRONG GROWTH OF GROUP AUM THANKS TO POSITIVE MARKET DEVELOPMENT AND REMARKABLE SALES PERFORMANCE ACROSS ALL REGIONS
DEC 04
(3) Calculated according to the “new” classification methodology adopted by Assogestioni since January 2005
(1) US + New Europe + International (ex Italy)
UCI TOTAL AUM(bn)
DEC 05
157(2)
DEC 04
128
+3.1%
Italy
International(1,2) 38
52
90105
+3.3%
+3.1%
% ch. vs Sep05
UCI mkt. share(3) 14.54%
… leading to continued gains in market share and # 2 ranking
UCI is undisputed leader of the Italian market in mutual funds’ net sales: 5,546 mln out of 8,439 mln for the entire system as at end 05…
A clear growth story based on Pioneer global presence: +29 bn AUM in 12 months, of which 14 bn in the international business units(1,2) (+37% y/y)
Further improvement in asset mix with positive impact on average pricing
15.57%
FEB 06
15.74%
DEC 05
(2) Including 4.3bn AuM of AmSouth acquired on September 26, 2005; Total AuM growth excluding AmSouth assets is +19.3% vs. Dec04
+22.6%
Strong contribution from UPB and Xelion: 2.6 bn net sales of asset management products in 2005 (+106% vs 2004)
Solid and consistent performance versus competitors in the worldwide ranking : Pioneer funds rank in the 35th percentile on a 1-year basis and in the 29th percentile on a 3-year basis
SEP 05
152(2)
50
102
15
4Q “CORE” INCOME FROM FINANCIAL TRANSACTIONS PRETTY IN LINE WITH THE PREVIOUS QUARTER
4Q/3Q stated trend affected by significant fair value adjustments and a single one-off exceptional gain posted in 3Q05:
INCOME FROM FINANCIAL TRANSACTIONS (mln)
(1) FY05 vs FY04 comparison barely significant as FY04 data are calculated excluding IAS 39 effects
1Q05
296
188
2Q05
225
159
253
137
3Q05
182
4Q05
Of which: Derivatives(Corporate +
Institutional + Retail)
956
632
FY05
-2.2%
-8.8%
Y/Y % ch.(1)of which 74 mln one-off from conversion of Convertendo FIAT
4Q “core performance(2)” pretty in line with 3Q05 (182 mln vs 179), with higher contribution of derivatives (148 mln vs 137 mln)
(2) Obtained adjusting both 4Q and 3Q05 for significant fair value adjustments and 3Q05 for the one-off gain coming from conversion of Convertendo FIAT; further details available in the slide
Negative mark-to-market of call option embedded in the Generali Exchangeable Note (-86 mln in 4Q05 vs -26 mln in 3Q05)(3)
74 mln one-off gain coming from conversion of Convertendo FIAT in 3Q
(3) Gains on the underlying security Ass. Generali are directly booked against equity, as Generali is included among AFS holdings
Exchangeable Ass. Generali effect:
+6 -8 -26 -86
148
-114
TOTAL (excl. Exchangeable Ass. Generali effect)
-28.1%
Q/Q % ch.
+1.7%
Net of Convertendo FIAT effect
16
OPERATING COSTS: +2.3% Y/Y NET OF FX EFFECTS, CHANGES IN PERIMETER AND ONE-OFFS
Current FX, mln Constant FX, mln exc. one-offs&
perimeter changes
5,701
2004 2005
6,045
Personnel costs
Other admin. expenses
Depr. & amortisation
Recovery of costs
+6.0%
5,673
2004 2005
+2.3%
FY05 OPERATING COSTS(1)
3,473
1,992466
3,720
2,092
468 5,804
462448
1,982
3,459
2,018
3,573
-230 -235 -230 -235
4Q05 OPERATING COSTS(1)
Current FX Constant FX exc. one-offs&
perimeter changes
1,497
3Q05 4Q05
1,624
Personnel costs
Other admin. expensesDepr. & amortisation
Recovery of costs
3Q05 4Q05
+3.7%
1,4661,520
+8.5%
916 996
528550113138
-60 -60 -60 -60
940
511128
109517
900
mln
(1) Net of recovered expenses (classified in the Bank of Italy scheme in item 220 of P&L)
Negative impact of changes in perimeter (86 mln mainly due to Yapi Kredi) and of a one-off step up of VAP(2) related charges to P&L (40 mln)
Operating costs (at constant FX and ex perimeter changes) rose by 2.3% yoy, due to: STAFF EXPENSES: +3.3% (+2.0% ex CEE), driven by,
Italian labour contract, higher variable compensation, CEE;
STAFF (ex new consolidations): down by -658 units (-1,070 in Italy)
OTHER ADMINISTRATIVE EXPENSES(1) up +1.8%, i.e. +31 mln o/w only 12 mln from ordinary expenses
DEPRECIATION: down by 3.1% yoy
(2) VAP is the productivity bonus envisaged by the Italian labour contract, paid cash in 2005 rather than in shares as in the previous year
(3) Due to a one-off contribution to the employees and their health insurance fund
Negative impact of first time consolidations (+54 mln vs 3Q05 ) and one-offs (10 mln staff costs(3))
Operating costs (at constant FX and ex perimeter changes) rose by 3.7% qoq, due to:
STAFF EXPENSES: up 4.5% qoq (+3.8% qoq ex CEE), driven by higher variable compensation (to reflect the good delivery on budget targets) and by CEE
OTHER ADMINISTRATIVE EXPENSES(1) strictly under control decreasing by –1.2% qoq
DEPRECIATION: up 18% qoq due to seasonal factors (yoy: +3.4%)
mln
17
GBS DIVISION: 2005 KEY ACHIEVEMENTS
GBS DIVISION
Review of most relevant Group Policies (e.g. Phone, Travel, Convention and Office Equipment)
Completion of several centralization activities (e.g. Retail Banking CRM, Pioneer SGR systems, UniCredit personnel administration procedures)
Approximately 100 people in-sourced to USI
ICT Synergies
Cost Management
Process Excellence Redesign and optimization of end-to-end cross-processes (domestic and foreign payments)
Space optimization program: “city action plans” for the major Italian cities completed (benefits for the Group: 42mln by 2007)
Space Rationalization
Procurement optimization
Kick off of new Global Sourcing Model (competence centers based model with global negotiators) Consolidation of on-line purchasing in Italy through I-Faber (negotiated volumes from 180 to 320 mln)
Kick off of UPA Romania completed as planned: 237 resources hired (105 operative and 132 in training process)Off-shoring
Tableau de Bord, to measure service quality in terms of time and errors Internal Customer Satisfaction (understanding of the internal client satisfaction
level)
Quality monitoring
Staff Efficiency
2005A
38,30439,368
Dec04
ITALY-1,064(1)
39,858
Jun04
-1,554
Headcount reduction: 1,554 vs June 2004 (launch of GBS staff rightsizing project) and 1,064 on Dec04
(1) -1,070 in IAS
ITAS figures
18
LIMITED Y/Y GROWTH OF NET LOAN LOSS PROVISIONS;4Q/3Q TREND AFFECTED BY EXTRAORDINARY RECOVERIES ACCOUNTED IN 3Q IN CORPORATE BANKING AND NEW EUROPE
PROFIT (LOSS) & NET WRITE-DOWNS ON LOANS (mln)
1Q05
190
2Q05
237
169
3Q05
314
4Q05
910
FY05
+2.5%
Y/Y % ch.
COST OF RISK(1) (bp)
2004 2005
-7 bp
64
57
3Q05
TOTAL 169
Retail 71
Breakdown by division(mln)
Corporate & IB 106
New Europe 1
Others & elisions -9
4Q05
Retail: higher provisions in 4Q (+104 mln vs 3Q) mainly arising from:
shift of doubtful loans to NPLs with consequent aligning of coverage ratios
write-off of loans detected during recognition of Past-due(2)
Corporate & IB: 118 mln in 4Q vs 106 in 3Q which benefited from an extraordinary recovery on a large name
New Europe: 41 mln in 4Q vs 1 mln in 3Q which benefited from one-off write-backs in ZABA; 4Q penalised also by first-time consolidation of Yapi (13 mln)
(1) Profit (loss) and net write downs on loans / Net customer loans as of 31.12(2) Past Due Loans: Loans to customers for which there are delays on re-payments (of interests and capital) higher than 180 days
314
175
118
41
-20
Reduction mainly driven by Corporate and New Europe divisions, which in 2005 benefited also from extraordinary recoveries (~60 bp net of these recoveries)
19
857
Very limited 4Q/3Q growth of net NPLs (+2.3% but 0.3% net of Yapi first-time consolidation) and of Doubtful Loans (+1.0% but -3.2% net of Yapi)
ASSET QUALITY: LIMITED GROWTH OF NPLs AND DOUBTFUL LOANS; REDUCED WEIGHT OF BAD & PROBLEM LOANS ON TOTAL LOAN PORTFOLIO
TOTAL NET BAD & PROBLEM LOANS (mln)
Sep05
4,268
2,168NPLs
Doubtful Loans
Restructured (2)
1,763
337
Dec05
5,275
2,218
1,781
419
-3.7%
Net of first time consolidation of Yapi
+3.5% net of Past Due
+1.0%
+2.3%
Past Due(1)
% ON TOTAL NET LOANS AND COVERAGE RATIOs (%)
NPLs Doubtful Total (ex Past Due)
1,42%1.38% 1.15% 1.11%
2.79% 2.75%
Sep05 Dec05
68.2%
69.0%
34.9%31.6%
57.1% 56.9%
% on tot. net loans
Coverage ratios
(1) Introduced for the first time in 4Q05; Loans to customers for which there are delays on re-payments (of interests and capital) higher than 180 days
~1.1 bn total provisions on performing loans, lower than Sep05 (approx. -170 mln) due to first time recognition of Past Due and consequent shift of part of the reserve previously created to cover the new category; 0.71% coverage ratio
-3.2%
+0.3%
Coverage ratio almost stable on Total Bad & Problem Loans (net of Past Due), significantly increased on NPLs
(2) 4Q/3Q growth of Restructured Loans (+24.3%) totally due to Yapi Kredi first-time consolidation (-32.6% ex Yapi)
Reduction of weight of all main categories of bad & problem loans on total loan portfolio
-32.6%
20
GOOD OPERATING PERFORMANCE AND SIGNIFICANT RISK ADJUSTED PROFITABILITY OF ALL BUSINESS DIVISIONS
2005 OPERATING INCOME BY DIVISION
y/y % ch.
2,106Corporate & IB+4.1%
or +10.8%(1)
1,641Retail +24.0%
4,979TOTAL GROUP +10.6%
927New Europe +19.4%
580Private & AM +29.9%
Mln
2005 RORAC(2) BY DIVISION
17.8%
21.3%
21.7%
33.1%
41.6%
Cost of Equity
(1) Excluding derivatives
Marginal RARORAC
(2) Return on risk adjusted capital = Marginal Rarorac + Cost of Equity
21
AGENDA
2005 UCI Group Consolidated Results
Annexes
HVB Group 2005 Results
UCI Group: Key Highlights
First Integration Achievements
UCI Standalone 2005 Results
22
HVB GROUP 2005 KEY HIGHLIGHTS: EXCEEDING GUIDANCE DRIVEN BY GOOD COMMERCIAL PERFORMANCE AND COST CONTROL
Stated 2005 net profit of 642 mln, impacted by 693(1) mln of non-recurrent effects associated to the integration into UniCredit Group
Adjusted net profit of 1,162(1) mln distinctly exceeding target of 1 bn thanks to a strong operating performance
Good quality of top-line growth (+8.2% y/y), thanks to positive contributions from all core revenue sources and sound development across all business segments
(1) Net Profit 2005 adjusted for restructuring costs related to the integration of HVB with UniCredit (546 mln) and higher general provisions for
losses on specific loans and advances (147 mln)
Underlying performance of operating costs better than 2005 target - Efficiency program PRO already paying off in Germany
Loan-loss provisions substantially in line with expectations at 1,335 mln excluding one-offs (147 mln)
Significant increase of profitability(2) of assets (from 3.51% in 2004 to 3.87% in 2005), in line with the plan’s strategy
RER portfolio reduced by 5.9 bn since Dec04 (-38.3%) through proactive restructuring and successful portfolio sales, fully in line with the announced guidance
(2) Calculated as Total revenues/Total Average RWAs (calculated according to KWG criteria)
23
2005 NET INCOME ADJUSTED FOR INTEGRATION EFFECTS BEATS TARGET OF 1 BN
mln
(1) Adjusted net profit calculated subtracting from adjusted pre-tax profit: taxes related to restructuring costs and additional loan loss provisions for 130 mln minorities related to restructuring costs and additional loan loss provisions for 33 mln
STATED NET PROFIT IMPACTED BY NON RECURRENT-EFFECTS
Additional provisions due to general provisions for losses on specific loans and advances of 147 mln in 4Q05
Restructuring costs include 456 mln of charges related to the integration into UCI, 90 mln of reorganization costs related to BA-CA SME business
1,299
2005 stated pre-tax profit
2005 adjusted pre-
tax profit
1,992147546
Restructuring costs
Additionalloan-loss provisions
Net Profit 642 1,162
Pre-tax Profit
(1)
24
HVB Group 2005(1)
FINANCIAL TARGETS SUCCESSFULLY MET BY HVB GROUP …
(1) FY05 Results adjusted for restructuring costs related to the integration of HVB into UniCredit (546 mln) and higher general provisions for losses on specific loans and advances (147 mln); FY04 Results adjusted for goodwill amortization (165 mln), allocation to special provisions for bad debt (2.5 bn) and additions to restructuring provisions (250 mln)
of which
Total Revenues
Net interest income – excluding dividend
9,697
5,575
(mln, if not differently specified)
Net commissions 3,198
Income from fin. transactions 576
Operating costs -6,608
Operating profit 3,089
Net writedowns on loans -1,482
Pre-tax profit 1,992
Net income 1,162
C/I Ratio 68.1%
Y/Y % Change(1)
+8.2
+5.1
+14.1
+11.0
+7.5
+9.9
-17.3
+98.8
-60 bp
Good increase of core revenues
Best results ever
Y/Y % Ch.(1) net of FX effect and first time consolidation
+4.5
+1.1
+11.0
+3.7
+4.1
+5.1
-18.3
+87.0
Substantially in line with expectations
-30 bp
>+100 >+100
Resilient despite significant reduction in real estate exposure
+0.9% excluding all non-recurring items
25
… WITH SIGNIFICANT CONTRIBUTION FROM BA-CA
BA-CA 2005(1)
(1) FY05 Results adjusted for restructuring costs related to the integration of BA-CA with UniCredit (109 mln) and higher general provisions for losses on specific loans and advances (70 mln); FY04 Results adjusted for goodwill amortization (58 mln)
of which
Total Revenues
Net interest income – excluding dividend
4,268
2,291
(mln, if not differently specified)
Net commissions 1,451
Income from fin. transactions 265
Operating costs -2,658
Operating profit 1,610
Net writedowns on loans -421
Pre-tax profit 1,504
Net income 1,121
C/I Ratio 62.3%
Y/Y % Change(1)
+10.3
+4.7
+18.3
+9.5
+5.9
+18.3
-0.9
+60.2
+67.1
-255 bp
Y/Y % Ch.(1) net of FX effect and first time consolidation
+5.9
-0.8
+14.1
+11.2
+1.8
+13.6
-4.0
+27.8
+23.8 Strong double digit growth
Strong Asset Management and Private Banking in Austria
Strong CEE, Austrian Large Corp. and SMEs margins under pressure
-254 bp
Costs under control, further improvement in productivity
Downward trend net of one-offs
Contribution to HVB Group net income(2) 868
(2) Calculated as 77.46% of Normalized net profit of BA-CA Group (1,121 mln)
26
2,188
NET INTEREST INCOME – excluding dividends
5,575
2004
5,303
2005
o/wBA-CA
2,291
3,2843,115
(mln)
+5.1%
FY05/FY04 growth :+5.1%, despite weak economic environment, low credit demand and high competitive pressure
Austria/CEE +8.9%: Austria: volume increase in residential mortgages and consumer credit;
CEE: higher volumes over all region and in the whole product range: from current accounts to credit cards and all requested financial products
GOOD COMMERCIAL PERFORMANCE FROM ALL HVB GROUP’S MAIN BUSINESS DIVISIONS(1):
Corporates & Markets +3.6%, mainly thanks to structured finance and IMB firs time consolidation
(1) Business segments performances are based on HVB Group consolidated numbers
SOLID GROWTH OF NET INTEREST INCOME
Germany +2.9%, thanks to positive development in the business unit Private customers:
Consumer finance (HVB-Sofortkredit) expanded nearly 30% y/y, with new business at 845 mln and more than 22,000 new customers (+10% y/y)
Real estate finance signed nearly 15,000 new contracts for a total volume of 1.55 bn sticking to a strict risk-adjusted pricing
The cooperation with Bayern Munich soccer club leads to a volume of deposits with FC Bayern savings cards of nearly 1.8 bn; 34,000 new customers by the end of 2005
+4.7%
+5.4%
27
1,227
NET COMMISSIONS
3,198
2004
2,804
2005
o/wBA-CA
1,451
1,7471,577
(mln)
+14.1% FY05/FY04 growth(1):
Securities and custodial services (+19.4% y/y), foreign trade/money transfer (+15.7% y/y) and lending operations (+10.9% y/y)
GOOD COMMERCIAL PERFORMANCE FROM ALL HVB GROUP’S MAIN BUSINESS DIVISIONS(1):
Austria/CEE +17.1%:
Austria: good performance of Retail’s securities and asset management business, Corporates’ structured investment products and derivatives, Investment Banking, foreign trade and guarantees
CEE: increasing use of corporate finance products and risk management services
Germany +12.6%, thanks to:
Private Customer business’ successful sale of core products (more than 145,000 product bundles (2) sold in 2005, gaining some 32,000 new customers, also increasing cross selling rate) and strong demand for innovative investment products, e.g. certificates (total sales volumes of 885 mln, further expanding market share) and the Activest Total Return fund (2.6 bn net inflow in 2005)
Corporates – sales success demonstrates core expertise: further increased sales in mezzanine products (PREPS)
Corporates & Markets +13.3%, benefiting from increase in number of transactions and sales volumes with clients as well as from improved capital markets environment
NET COMMISSIONS: BEST RESULTS EVER!
+18.3%
+10.8%
(1) Business segments performances are based on HVB Group consolidated numbers
(2) E.g. StarterPaket, KompaktPaket, KomfortPaket and PremiumPaket
28
58
2,5092,658
First time consolidation
6,148
HVB GROUP OPERATING COSTS
2004 2005
6,608
+5.9%
(3) Restated for IFRS revised initial application, organizational changes, deconsolidation and disposals of subsidiaries
o/wBA-CA Group
2004
FX impact
2005
6,608
139
+2.3% 69
+1.1%
(2) Numbers from HVB Group consolidated financial statements
UCI pro-forma figures, mln
Non-scheduled
depreciation on land/
buildings
+1.7%
102
ADJUSTED ORGANIC GROWTH
+0.9%
+4.1% y/y growth net of first time consolidation(1) and FX effects: better than 2005 guidance of +6%
Germany(2)(3): cost efficiency program PRO already paying-off – moderate increase in operating costs (+1.9% y/y)
Private Customer unit’s costs declined by 1.3% y/y
In 2005 PRO cost reduction of 76 mln exceeded planned savings of 55 mln
Staff reduction on track while using socially acceptable measures (within HVB over two thirds – i.e. 1,420 of 2,100 – of targeted layoffs executed or finally negotiated)
Confident to achieve envisaged cost savings of at least 280 mln by 2008; restructuring costs recognized in 2004 are sufficient
+ 0.9% Y/Y ADJUSTED COST GROWTH: EFFORT TO GAIN EFFICIENCY CLEARLY PAYING OFF
+7.5%
3,950
6,148
3,639 +8.5%
Retention/performance
bonus
92
+1.5%
(1) Consolidation: International Moscow Bank; Hebros Bank;HVB Capital Asia; Banca Comerciala Ion Tiriac; HVB Serbia and Montenegro; BPH Leasing; Westfalenbank; deconsolidation: Gornoslaski Bank.
29
TOTAL CREDIT EXPOSURE AND NPLs COVERAGE RATIO SUBSTANTIALLY IN LINE 4Q/3Q
(3) Net Loan Loss Provisions (excluding special provisions for bad debt of 2.5 bn in 2004)/Credit RWAs (calculated with BIS) as of 31.12
(bn)HVB Group - Total Credit Exposure
401.1
4Q04
394.4
3Q05(1) 4Q05
401.6
+1.8%
HVB Group – Coverage Ratio(2)
(%)+0,1%
(2) Total Loan loss provisions/NPLs (Exposure in 9-10 Rating Classes)
56.4%57.7% 56.3%
-1.4% pp -10 bp
(bp)HVB Group – Cost of risk(3)
75
2005
62
-13 bp
Total credit exposure at ~402 bn, increased by 1.8% y/y almost totally due to Austria/CEE segment (+13%)
Total net loan loss provisions at ~1.5 bn, including 147 mln one-off
Reduction of cost of risk mainly due to lack of large write-downs of RER portfolio made in 2004
2004
(1) Data consistent with HVB Group 3Q05 results presentation; credit exposure figures as of Aug. 2005
4Q04 adjusted for initial application
of modified IFRS
3Q05(1) 4Q05
Significant improvement of risk/earning ratio(4) (from ~32% in 2004 to ~26% in 2005)
(4) Calculated as Total Net write-downs on loans/Net interest income (HVB Group stated figures; 2004 excluding extraordinary 2.5 bn provisions on RER)
Substantial stability of NPLs coverage ratio in 4Q vs. 3Q
30
-38.3%
5.9 bn reduction of Total RER portfolio achieved in 2005, well above expectations, thanks to effective work-out policies and disposal of a first significant tranche of ~1.8 bn made in 4Q05
RER Portfolio – Total Credit Exposure
RER PORTFOLIO: SIGNIFICANT AND SUCCESSFUL 5.9 BN DOWNSIZING SINCE DEC04, FULLY IN LINE WITH OUR GUIDANCE
(bn)
15.4
4Q04 4Q05
9.5
3Q05
12.8 Disposal of another tranche of ~2.1 bn
of sub-and non-performing real estate loans already agreed and expected to be completed during 2006
Total RER portfolio already cut back by ~50%, net of all announced disposals
Further reduction expected in 2006 and the following years
31
17.5 17.217.4
Y/Y % Change
GERMAN REAL ESTATE (EXCL. RER): EXPOSURE FURTHER DECLINED, PRIMARILY IN PROFESSIONAL REAL ESTATE SEGMENT
German Real Estate (excl. RER)(1) – Total Gross Credit Exposure(bn)
-2.4 %
4Q05
-3.2 %
(1) Based on HVB AG accounts only; Real Estate financing exposure not including RER and Cash Flow driven exposures to corporate customers handled via real estate collateralized loans
28.0
39.3
3Q05
84.8
26.5
38.4
82.1
29.6
39.9
86.9
4Q04
Real Estate (IMO(2))
Corporate Customers (FFB)
Private Customers (PPB)
-5.5 %
-10.5 %
-1.1 %
-3.8 %
Decrease in line with HVB's strategic goal to reduce real estate exposure
(2) IMO unit comprises exposure to Professional Real Estate customers
32
HVB GROUP – CORE PORTFOLIO(1): MODEST INCREASE OF TOTAL EXPOSURE WITH SLIGHT 4Q/3Q REDUCTION OF WEIGHT OF TOTAL NPLs
(2) Including Not Rated exposures of ~20 bn as of 4Q04 and 3Q05 and of 18,8 bn as of 4Q05
(bn)
Core Portfolio(1) - Total Credit Exposure
% Weight of NPLs (9-10 Classes)
388.3
4Q04
379.0
3Q05 4Q05
390.3
NPLs slightly decreased since 3Q05 while substantially stable vs 4Q04
Share of NPLs slightly decreased by 2.9% in the last quarter 2005
(%)
-2.9 %
4Q04 3Q05 4Q05
NPLs (9-10 Classes)
ARF + 1-8 Classes + Not rated (2)
13.112.812.9
375.2366.2
3.43.4 3.3
377,4
q/q % change
+0.5 %
-1.5 %
+0.6 %
+0.8%
(1) Total Core Portfolio excluding RER induced exposures
33
SIGNIFICANT INCREASE OF ASSETS PROFITABILITY
TOTAL RWAs (EoP) (1)
(1) Including RWAs for credit, market and other risks and consolidated into UniCredit Group’s accounts; calculated according to KWG criteria
(bn)
75.9
246.2
2004
254.7
2005
o/wBA-CA 78.8
TOTAL REVENUES/ TOTAL AVERAGE RWAs(1)
(%)
3.87%
20052004
3.50%
+36 bp
Reduction of total RWAs, driven by lower real-estate collateralized credit exposure and significantly reduced market risks due to the adoption of the advanced internal model
Increased focus on higher risk-adjusted return business areas (e.g. Austria/CEE, Corporate & Markets)
Significant increase of profitability of assets, in line with the plan’s strategy
178.8 167.4
-3.3%
+3.8%
-6.4%
34
AGENDA
2005 UCI Group Consolidated Results
Annexes
HVB Group 2005 Results
UCI Group: Key Highlights
First Integration Achievements
UCI Standalone 2005 Results
35
CLEAR INTEGRATION ACHIEVEMENTS IN ONLY FOUR MONTHS, SHOWING THE STRENGTH OF THE NEW GROUP
GOVERNANCE & KEY PEOPLE MANAGEMENT
New Holding structure (Divisional/Functional approach) with new governance rules leading to clear accountability/responsibilities
Key people empowered (senior Holding Functions/Divisions managers, top management for most relevant legal entities)
Leadership Team Development to improve group execution skills (i.e. meeting in Munich involving 350 key managers)
CREATION OF DIVISIONAL PERIMETERS
Divisionalisation project in Germany well under waySmall business and professionals transferred to Retail divisionPrivate customers moved from Retail and Corporate to the new Wealth Management divisionMortgage business incorporated into Retail division since beginning of 2006 New segmentation of corporate clients; Trade finance from Investment Banking to Corporate
Divisionalisation projects started in Austria
Leadership for Results: training program for sales force and network employees in Germany and Austria
36
FOCUS ON ORGANISATION AND COST MANAGEMENT
COST MANAGEMENT AND RATIONALISATION INITIATIVES
Cost management team in Global Banking Services Division fully dedicated to identifying savings opportunities (operating on HVB AG and on the consolidated subsidiaries)
Centralisation and renegotiation of global purchasing also leveraging on UCI marketplace technology, creation of best practice and benchmarking as drivers for local purchasing
Foreign branches rationalization: streamline of operations in overlapping branches (mainly London and New York), review of presence in other markets
Project for the adoption of the single Group IT platform (Eurosig) in Germany (to be completed in 2008), but pilot initiative in Czech Republic from April 2006
ORGANISATION & PROCESSES
New organizational structure in HVB:Creation of GBS within HVB consolidating IT, back office and organizational functionsStronger and more independent divisions also incorporating HR, Marketing and
Communication, Organization and Planning & Control functions
Definition and set up of new Group Credit Governance principles (credit process redesign)
Asset Management – Centralisation of investment management, product range rationalization and branding integration
37
2006 DIVISIONAL EARLY WINS
MULTINATIONALS & INVESTMENT BANKING European distribution power in the primary bond market strengthened by jointly acting as Lead Arrangers (first
jointly led Italian covered bond leveraging on German covered bond expertise) By joining forces, UniCredit (represented through HVB and UBM) climbs 2005 league tables:
# 2 European CDO, CBO & CLO(1) bookrunners (total volume), # 8 ABS(2) transactions (total volume)
More deterministic incentive schemes for commercial German network to be adopted first in Retail (in 2H06) Re-launch of consumer credit products in Germany (Sofortkredit)
RETAIL
UCI/HVB banks mergers launched in Bulgaria, Czech Rep. and Slovakia
Retail – launch of Consumer Finance (pilot JV with Clarima in Bulgaria) and Credit Protection Insurance (Croatia, Bulgaria, Czech Rep.)
Corporate – referral of German and Austrian Clients to main CEE countries (e.g. Turkey)
CEE
Launch of the Cross border clients groups (CBCG) project
Leasing as and Trade/Export Finance global business lines involving all countries of presence
Derivatives business project in Germany launched, with transfer of best practice from UBI / UBM
CORPORATE & SMEs
1.5 bn net sales in Germany in two months, comprising three major institutional mandates
Set-up of Private Banking dedicated network in Germany
PRIVATE BANKING & ASSET MANAGEMENT
(1) CDO: Collateralized Debt Obligations; CBO: Collateralized Bond Obligations; CLO: Collateralized Loan Obligations(2) ABS: Asset-backed Securities
38
WHAT HAS BEEN DONE SO FAR REGARDING NEW GROUP’S STRUCTURE RESTRUCTURING
Mandatory offers on minorities of BPH (no shares tendered) and Yapi Kredi (0.005% of share capital tendered) already concluded
Bank of the Regions agreement renegotiated with AVZ and BR Funds(1):
(1) BA-CA Employees’ Council Fund
Sale process of Splitska Banka already well advanced, expected to be finalized soon
Polish situation:
Replacement of the previous Bank of the Regions Agreement and related agreements
BA-CA to become CEE sub-holding company within UniCredit Group
Investment banking and asset management operations to be integrated at Group level
Election of majority of BA-CA’s Supervisory Board members upon proposal of UniCredit to take place at the next ordinary general meeting of BA-CA, scheduled in May 2006
GINB(2) gave a positive recommendation to the Banking Supervision Commission on March 3rd to grant UniCredit the right to exercise its voting rights in BPH
Constructive meeting held on March 17th between Prime Minister Marcinkiewic and Mr. Profumo
Approval for UniCredit to exercise its voting rights in BPH to be discussed at the next meeting of Banking Supervision Commission scheduled for April 5th
(2) General Inspectorate for Banking Supervision
39
AGENDA
2005 UCI Group Consolidated Results
Annexes
HVB Group 2005 Results
UCI Group: Key Highlights
First Integration Achievements
UCI Standalone 2005 Results
40
Details on 2005 UCI standalone results
Divisional Reporting
Retail Division
Corporate & IB Division
Private Banking & AM Division
New Europe Division
ANNEXES
41
CONSOLIDATION AREA AND OTHER ACCOUNTING ISSUES
Initial consolidation of HVB Group from October 31, 2005, in compliance with IFRS3 – “Business Combinations”
Throughout the presentation, the following definitions apply: STATED Group P&L includes HVB Group net results for November and December 2005 PRO-FORMA Group P&L includes HVB Group net results as if it was consolidated from
January 1, 2005
Group perimeter includes proportional consolidation of Yapi Kredi Bancasi (57% controlled by KFS, a JV of UCI and Koç Finansal Hizmetler) from October 1, 2005
Group consolidated Balance Sheet as of December 31, 2005, includes HVB Group single items line-by-line
IAS 32 and IAS 39 applied from January 1, 2005, implying that comparisons FY05 vs. FY04 and 4Q05 vs. 4Q04 are affected by differences in accounting principles
42
“FAIR VALUE DRIVEN” BALANCE SHEET ADJUSTMENTS IN FIRST CONSOLIDATION OF HVB AND BA-CA RESULT IN 1.2 BN LOWER GOODWILL
In first time consolidation some assets and liabilities of HVB and BA-CA have been booked at fair value rather than at their carrying value in the balance sheets of the newly consolidated companies
Main Fair Value adjustments
Intangible Assets
(bn, if not differently specified)Impact on 31.10.’05 Goodwill
Impact on Core TIER 1
Ratio
Properties
Loans(2)
(2) Almost entirely Loans to Customers (minimal impact also on Loans to Banks)
Pension Plan
Investments
Other liabilities(3)
(3) Most of this item is represented by debt certificates
TOTAL
Fair value adjustments on trademarks, customer relationship -1.5 =
Fair value adjustments on properties -0.5 +
Fair value adjustments on loans and advances to customers and banks
-3.9 +
Pension Plan liability adjustment based on revised financial parameters
+1.2 -
Fair value adjustments on investment portfolio
-0.8 +
Fair value adjustments on deposits, debt certificates and subordinated debt +3.9 -
Deferred tax assets and liabilities related to the adjusted items +0.5 -
- 3 bp-1.2
1.2 bn lower goodwill -3 bp impact on core tier I capital -52 mln impact on UCI’s pro-forma
2005 net profit(1)
“FAIR VALUE DRIVEN” BALANCE SHEET ADJUSTMENTS Impacts
(1) Due to higher amortization and an adjustment on the capital gain on the sale of part of the stake in Munich Re
Fiscal effects
43
% ch on 3Q05 4Q05
1,170
-52
-314
456 -32.6
+102.3
-9.3
+85.9
73 +176.7
-1,624
1,433
2,794 +0.2
+8.5
+4.3
1,163 +4.4
96 -57.3
-995 +8.7
60 -0.6
58.1% +4.4 pp
VERY GOOD PERFORMANCE OF UCI IN 2005
Gross operating profit
Provisions for risks & charges
Net write-downs on loans
IAS, mln
Net income UCI standalone
Net Profit (loss) on investments
(1) 4Q04 & FY04 excluding IAS 32 & 39
Administrative costs (incl. depr.)
- of which net interest income (excl. div.)
Total revenues
- of which net commissions
- of which trading income
- of which staff costs
- of which recovered expenses
COST/INCOME ratio (%)
y/y% ch.(1) FY05
4,979
-154
-910
-41.9
+10.6
+2.5
2,573 +24.4
330 +159.8
-6,045
5,394
+6.0
+10.6
11,024 +8.0
4,373 +12.0
842 -13.9
-3,720 +7.1
235 +2.2
54.8% -1.1 pp
% ch on 4Q04(1)
+8.8
-74.3
+2.9
+37.7
-26.3
+8.3
+12.5
+13.4
+13.7
-40.7
+15.4
-15.5
+2.2 pp
352 n.m.Net income UCI stated (incl. integ. costs and HVB impact for 2M)
2,470 n.m.n.m.
44
Retail Division
Corporate Division
Priv.& AM Division
NE Division
Total Group(1)
Total revenues+2.5% -12.5% +13.7% +1.6% +0.2%
Operating costs
Operating income
Net write-downs of loans
Net income for the Group (UCI standalone)
C/I Ratio
-2.4% -0.1% +20.8% +32.2% +8.5%
+10.7% -17.9% +4.4% -29.4% -9.3%
n.m. +11.3% n.m. n.m. +85.9%
-43.1% -24.7% +4.7% -61.8% -32.6%
-3.0 pp +4.2 pp +3.5 pp +15 pp +4.4 pp
(1) Balance due to the Parent Company, other Group companies and elisions
(2) Calculated on data at current FX; q/q % ch. non meaningful for NE division as 4Q05 includes first time consolidation of YKB
(mln - Data at current FX)
DIVISIONAL CONTRIBUTION TO CONSOLIDATED RESULTS IN 4Q05
1,122 711 397 575 2,794
-672 -247 -238 -378 -1,624
450 464 159 198 1,170
-175 -118 -1 -40 -314
120 202 113 65 456
59.9% 34.7% 59.9% 65.6% 58.1%
(3) FTE including Koc Group pro quota
Employees(3) 23,565 5,201 3,499 32,264 71,470
4Q05 RESULTS
% Change vs 3Q05(2)
% Change vs 3Q05(2)
% Change vs 3Q05(2)
% Change vs 3Q05(2)
% Change vs 3Q05(2)
Change in pp vs 3Q05(2)
IAS, mln
45
NON OPERATING ITEMS
Operating income
Provisions for risks & charges
Net Income UCI standalone
Net write-downs of loans
Profit/loss on investments
Taxes
Minorities
2Q05
1,303
-34
665
-237
25
-340
-52
3Q05
1,291
-26
676
-169
27
-383
-64
1,215
-42
777
1Q05
-190
205
-367
-44
4Q05
1,170
-52
456
-314
73
-306
-57
FY05
4,979
-154
2,573
-910
+330
-1,396
-217
IAS, mln
352 2,470Net income UCI stated (incl. integ. costs and HVB impact for 2M)
46
-on gross doubtful loans, % 40.3% 39.0%
-on gross NPL, % 61.9% 60.6%
Gross doubtful loans 1,484
Net doubtful loans/Tot. net loans,% 1.48%
1,360
1.32%
-8.4%% change on Sep 05
Gross doubtful loans/Tot. gr. loans,% 2.38% 2.09%
Net doubtful loans 886 829
-6.4%% change on Sep 05
ASSET QUALITY: DETAILS BY DIVISIONS
Coverage ratios
Retail Division
Sep 05 Dec 05
(2) Balance due to other Group companies
(IAS, mln - Data at end of period FX)
Corporate & IB Division
NE Division(1) Total Group(2)
Gross NPL% change on Sep 05
Gross NPL/Tot. gr. loans,%
Net NPL/Tot. net loans,%
2,244
3.60%
1.42%
2,515
3.87%
1.58%
+12.1%
Net NPL
% change on Sep 05
854 990
+15.9%
Sep 05 Dec 05 Sep 05 Dec 05 Sep 05 Dec 05
31.8% 31.5%
50.0% 49.9%
720
0.70%
654
0.62%
-9.2%
0.99% 0.89%
490 448
-8.6%
2,031
2.80%
1.44%
1,771
2.41%
1.24%
-12.8%
1,015 888
-12.5%
22.8% 14.2%
88.6% 88.0%
496
2.24%
584
2.40%
+17.7%
2.53% 2.47%
383 501
+30.8%
2,419
12.4%
1.61%
2,761
11.7%
1.58%
+14.1%
275 330
+20.0%
34.9% 31.6%
68.2% 69.0%
2,707
1.15%
2,605
1.11%
-3.8%
1.69% 1.55%
1,763 1,781
+1.0%
6,819
4.26%
1.42%
7,147
4.27%
1.38%
+4.8%
2,168 2,218
+2.3%
(1) New Europe Division significantly impacted by first-time consolidation of Yapi Kredi in 4Q05
% change on Sep 05 net of YAPI FT consolidation +4.4% +0.3%
% change on Sep 05 net of YAPI FT consolidation +11.5% -3.2%
47
53.3% 53.0%
-on total gross bad & pr. loans, % 53.3% 48.1%
Total gross bad & problem loans 3,728 4,501+4.0%% change on Sep 05(3)
Tot. gr. bad & pr. loans/Tot. gr. loans,%(3) 5.98% 5.96%
ASSET QUALITY: DETAILS BY DIVISIONS (CONT.)
Coverage ratios
Retail Division
Sep 05 Dec 05(IAS, mln - Data at end of period FX)
Corporate & IB Division
NE Division(1) Total Group(2)
Gross other bad & problem loans
% change on Sep 05(3)
- 626
Sep 05 Dec 05 Sep 05 Dec 05 Sep 05 Dec 05
41.7% 42.4%
41.7% 38.3%
3,157 3,080-14.0%
4.36% 3.69%
406 655
77.4% 71.2%
77.4% 71.2%
2,919 3,543+21.4%
14.9% 15.0%
4 198
57.1% 56.9%
57.1% 53.1%
9,939 11,237+3.1%
6.21% 6.11%
413 1,485
of which: Past Due
n.s. -28.8% n.s. +18.9%
625 366 - 994
(3) Net of “past due effect” in 4Q05
Net other bad & problem loans
% change on Sep 05(3)
- 516 335 565 2 190 337 1,276
of which: Past Duen.s. -32.5% n.s. +24.3%
515 339 - 857
Total net bad & problem loans 1,740 2,335
+4.6%% change on Sep 05(3)
Tot. net bad & pr. loans/Tot. net loans,%(3) 2.90% 2.91%
1,841 1,901
-15.2%
2.61% 2.18%
660 1,021
+54.7%
3.85% 4.89%
4,268 5,275
+3.5%
2.79% 2.75%
-on total gross bad & pr. Loans (excl. past due), %
(2) Balance due to other Group companies
(1) New Europe Division significantly impacted by first-time consolidation of Yapi Kredi in 4Q05
% change on Sep 05 net of YAPI FT consolidation(3) +7.9% -3.7%
48
Details on 2005 UCI standalone results
Divisional Reporting
Retail Division
Corporate & IB Division
Private Banking & AM Division
New Europe Division
ANNEXES
49
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
TOTAL1UniCreditBanca
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses
UniCreditAssicura
- o/w: Net write-downs of loans
2,240
1,843
4,083
1,474
-1,235
-1,517
-2,608
735
735
63.9%Cost/income Ratio
-299
-191
Clarima UBCasa
1 Balance due to roundings and elisions
170
32
202
128
-59
-20
-74
35
35
36.7%
-69
-70
131
-4
127
67
-37
-24
-60
28
28
47.2%
-39
-39
2
11
13
5
-4
-3
-8
3
3
61.1%
-
-
2,509
1,882
4,391
1,641
-1,336
-1,564
-2,750
609
609
62.6%
-407
-460
Restructuring Charges -85 - - - -85
RETAIL DIVISION: FY05 RESULTS BREAKDOWN BY COMPANY
50
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
4Q05
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses
- o/w: Net write-downs of loans
654
468
1,122
449
-320
-394
-672
63
63
59.9%Cost/income Ratio
-175
-196
% ch. on 3Q05
+3.8
+0.5
+2.4
+10.6
-6.1
+3.5
-2,4
n.m.
n.m.
-296 bp
n.m.
n.m.
% ch. on 4Q041
+7.9
+1.6
+5.2
+10.5
-3.4
+4.3
+1.9
-33.9
-33.6
-192 bp
n.m.
n.m.
2005
2,509
1,882
4,391
1,641
-1,336
-1,564
-2,750
609
609
62.6%
-407
-460
y/y % ch.1
+8.1
+9.1
+8.5
+24.0
+2.2
+1.4
+1.0
+23.0
+23.4
-465 bp
+47.0
+39.9
1 2004 and 4Q04 do not include IAS 39 effect
Restructuring Charges -85 - -41.7 -85 -41.7
RETAIL DIVISION: 4Q05 AND 2005 INCOME STATEMENT
51
RETAIL DIVISION: STRONG LENDING VOLUMES INCREASE DRIVING NET INTEREST INCOME GOOD GROWTH
EXCELLENT MARKET SHARE AND LENDING GROWTH (+14.5% Y/Y) …
Household mortgages(1)(2) +9.4% y/y
Consumer credit(1) +37.4% y/y, with Clarima becoming #2 player in the Italian market
Small Business(1) +10.0% y/y, mainly thanks to s/term loans
… AND GOOD SPREAD RESILIENCE IN ALL KEY MARKETS…
4Q average spread(3) on:
new mortgages at 1.28% for UCB (stable q/q) and 1.45% for UBCasa (+2 bp q/q)
small business(4) s/term loans at 6.99% (-36 bp q/q)
revolving cards at 11.77% (-12 bp q/q)
… SUSTAINING NET INTEREST INCOME SOUND PERFORMANCE
2004
2,298
NET INTEREST INCOME (ex. div.), mln
2005
2,469
(3) Management accounts(4) Management accounts, including also
maximum overdraft charges
+7.4%
(1) Bank of Italy matrix data (ITAS)(2) Including the effects of 3 bn securitisation carried out in 2Q05. Ex securitisation,
y/y growth would be +17.8%
52
STAFF COSTS (mln)
-1,063 vs. June 04
TOTAL STAFF
RETAIL DIVISION OPERATIONAL ACHIEVEMENTS
Staff Reduction Plan Well on Track (~55% of the total reduction announced in the 3 year plan already achieved)…
Continued focus on wealth management products generating recurring revenues
SALES OF SEGR. ACCOUNTS INVESTING IN FUNDS, bn
… with clear effects on total staff costs, despite new labour contract. Cost income ratio down to 62.6% (from 67.3% in 2004)
Excellent growth of contribution to group net income, +23.0% y/y even after restructuring charges linked with HVB acquisition (+34.9% ex restructuring charges)
CONTRIB. TO GROUP NET INCOME (mln)
4Q04
1.5
3Q05
2.2
4Q05
1.9
2004
495
2005
609 +23.0%
2004
1,543
2005
1,564+1.4%
25,098 24,364
-734
2004 2005
53
5.9 5.9
RETAIL DIVISION - MORTGAGES AND CONSUMER FINANCING
RESIDENTIAL MORTGAGESSTOCK, bn NEW FLOWS, bn
CONSUMER FINANCINGDEC04 DEC05
32.2
35.3+9.4%(2)
NEW FLOWS OF PERSONAL LOANS, mln
271 mln285 mln
REVOLVING CARDS TOTAL SPENDING(3) (294k new revolving cards in 2005)
9M05
33.5
mkt share(1)
17.76%
16.76%(2) 16.85%(2)
(1) Group market share, related to mortgages to households as of Bank of Italy definition in table TDME0070 of the monthly bulletin(2) Excluding 3 bn securitisation, mortgage growth would be +17.7% y/y and market share 17.86% (+10 bp y/y)
DEC04 DEC05
1,353
1,866
+37.9%
8.4 8.7
+4.2%
2.5 2.8
UCB
UBCasa
+0.1%
+14.0%
STOCK, bn
2.8
3.8+37.4%
3.5
(3) POS and ATM spending
DEC04 DEC059M05 DEC04 DEC05
DEC04 DEC05
54
RETAIL DIVISION - SMALL BUSINESS STOCK, SPREAD AND CUSTOMER ACQUISITION
STOCK, bn, ITAS
2005
SHORT TERM SPREAD(1)
NOTE: historical data have been restated to reflect the spin-off of CR Carpi and Banca dell’Umbria activities between UCB, UBI and UPB
16.4
+10.0%
1Q04
18,000
2Q04
19,000
3Q04
15,000
4Q04
17,500
QUARTERLY TRENDS IN SMALL BUSINESS CUSTOMER ACQUISITION
1Q05
17,000
2004
14.9
3Q05
16.0
2Q05
19,000
3Q05
12,000
(1) Management accounts, includes also maximum overdraft charges
1Q04
7.99% 7.96%
2Q04
7.99%
3Q04
7.98%
4Q04
7.87%
1Q05
7.59%
2Q05
7.35%
3Q05
6,99%
4Q05
4Q05
14,000
55
DEC04
DEC04
+4.0%
+7.3%
+24.7%-10.2%
+5.2%
-3.2%
+1.7%
55.1
67.2
32.2
22.8
14.9
2.85.2
15.1
29.3
RETAIL DIVISION - CUSTOMER LOANS AND CUSTOMER DEPOSITS BREAKDOWN AND DETAILS OF SHORT TERM SPREADS
SB loans (1)
Residential mortgages (2)
Cons. creditOther loans
EOP LOANS, Euro bn, ITAS
UCB AVG. MARK UP(3) (Households), %
Other deposits
Households c/accounts
Bonds
EOP DEPOSITS, Euro bn, ITAS UCB AVG. MARK-DOWN(3) (Households), %
UCB AVG. MARK UP(3) (Small Business), %
(2) Includes only households mortgages(3) Source: Bank of Italy matrix data
DEC05
DEC05
60.3
73.9
27.2
4.8
16.2
30.5
+10.0%
7.27
1Q05
1.70
5.43
1Q05
1Q05
7.30
2Q05
1.70
5.34
2Q05
2Q05
+5.2%
+2.5%
+10.2%+3.2%
+9.4%
7.20
3Q05
1.69
5.23
3Q05
3Q05
NOTE: historical data have been restated to reflect the spin-off of CR Carpi and Banca dell’Umbria activities between UCB, UBI and UPB(1) Includes short term and m/l term loans
+13.5%
+11.0%
+2.3%
3Q05
3Q05
57.6
68.3
33.5
24.0
16.0
3.54.6
14.6
29.8
35.3
16.4
3.8 4.94
4Q05
4Q05
1.82
6.66
4Q05
56
2,335
RETAIL BANKING DIVISION - ASSET QUALITY: SIGNIFICANT SHIFT FROM DOUBTFUL LOANS TO NPLs IN 4Q05; LOWER WEIGHT OF BAD & PROBLEM LOANS ON TOTAL LOAN PORTFOLIO
(1) Introduced for the first time in 4Q05; Loans to customers for which there are delays on re-payments (of interests and capital) higher than 180 days
515
TOTAL NET BAD & PROBLEM LOANS (mln)
Sep05
1,740
854NPLs
Doubtful Loans
Restructured
886
Dec05
990
829
1
+4.6% net of Past Due
-6.4%
+15.9%
Past Due(1)
% ON TOTAL NET LOANS AND COVERAGE RATIOs (%)
Sep05 Dec05
53.3% 53.1% 38.9% 39.5%
NPLs + Doubtful Loans
2.90% 2.91%
% on tot. net loans
Coverage ratios
Significant shift from doubtful loans to NPLs in 4Q05
Coverage ratio slight decrease (-27 bp) on NPLs + Doubtful Loans; Excluding the reversal on Time Value accounted in First Time Adoption the coverage ratio would go up 62 bp vs. Sep 05
Stable weight of NPLs +Doubtful loans on total net loans. Excluding the reversal on Time Value accounted in First Time Adoption the weight on total net loans would go down 5 bp vs. Sep 05
NPLs + Doubtful Loans excluding Time Value effect
3.76%3.71%
57
Details on 2005 UCI standalone results
Divisional Reporting
Retail Division
Corporate & IB Division
Private Banking & AM Division
New Europe Division
ANNEXES
58
CORPORATE & INVESTMENT BANKING DIVISION: 2005 INCOME STATEMENT- BREAKDOWN BY COMPANY
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
TOTAL(1)UBI
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses(2)
Other companies
- o/w: Net write-downs of loans
1,326
580
1,905
1,381
-209
-313
-524
550
550
+27.5%Cost/income Ratio
-363
-411
UBM LOCAT
(1) Balance due to roundings and elisions of infragroup dividends and goodwill amortisation; Division net of Broker Credit, moved to the GBS Division during 4Q05
-11
708
697
456
-98
-133
-241
280
280
+34.6%
-1
-3
216
60
276
188
-19
-32
-88
97
97
+31.7%
-25
-27
78
115
194
81
-19
-39
-113
24
24
Not significant
-22
-24
1.609
1.463
3.072
2.106
-345
-517
-966
951
951
31.4%
-411
-465
Restructuring Charges -24 - -1 -3 -28
(2) Net of recovered costs
59
CORPORATE & INVESTMENT BANKING DIVISION: 4Q05 AND 2005 INCOME STATEMENT
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
4Q05
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses(2)
- o/w: Net write-downs of loans
427
284
711
467
-84
-132
-245
184
183
+34.4%Cost/income Ratio
-118
-124
% ch. on 3Q05
+6.5
-31.0
-12.5
-17.9
-4.8
+0,7
-0.1
-31.5
-31.7
+427 bp
+11.3
+4.8
% ch. on 4Q04(1)
+11.0
+1.7
+7.1
+8.6
-9.1
+13.4
+4.3
+5.1
+5.1
-91bp
+8.9
-19.5
2005
1,609
1,463
3,072
2,106
-345
-517
-966
951
951
31.4%
-411
-465
y/y % ch.1
+3.1
+5.2
+4.1
+4.1
+0.4
+7.2
+4.0
+8.6
+8.5
-1 bp
-15.1
-14.5
(1) 2004 and 4Q04 do not include IAS 39 effect; Division net of Broker Credit, moved to the GBS Division during 4Q05
Restructuring Charges -28 n.s. -13.6 -28 -13.6
(2) Net of recovered costs
60
CORPORATE & INVESTMENT BANKING DIVISION - ASSET QUALITY: SIGNIFICANT REDUCTION OF NPLs AND DOUBTFUL LOANS; LOWER WEIGHT OF BAD & PROBLEM LOANS ON TOTAL LOAN PORTFOLIO
(1) Introduced for the first time in 4Q05; Loans to customers for which there are delays on re-payments (of interests and capital) higher than 180 days
339
TOTAL NET BAD & PROBLEM LOANS (mln)
Sep05
1,841
1,015NPLs
Doubtful Loans
Restructured
490
335
Dec05
1,901
888
448
226 -15.2% net of Past Due
-8.6%
-12.5%
Past Due(1)
% ON TOTAL NET LOANS AND COVERAGE RATIOs (%)
Sep05 Dec05
50.0% 49.9% 31.8%31.5%
41.7% 42.4%
NPLs Doubtful Total (ex Past Due)
1,44%1.24%
0.70%0.62%
2.61%2.18%
% on tot. net loans
Coverage ratios
Significant 4Q/3Q reduction of net NPLs (-12.5%) and Doubtful Loans (-8.6%), also thanks to completion of the disposal of a first tranche (270 mln) of the 1.8 bn Gross Bad Loans sale announced by UniCredit Group in 4Q05
Coverage ratio almost stable on NPLs and Doubtful Loans; increased on Total Bad & Problem Loans thanks also to the significant reduction of net restructured loans (-32.5% 4Q/3Q) related to flow-backs to performing loans
Reduction of weight of all main categories of bad & problem loans on total loan portfolio
61
CORPORATE & INVESTMENT BANKING SEGMENTS: 2005 INCOME STATEMENTS
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses(4)
- o/w: Net write-downs of loans
Cost/income Ratio
2005
1,621
751
2,372
-249
-380
-722
672
671
30.4%
-410
-463
y/y % ch.3
+1.8
+8.5
+3.8
+4.3
+2.0
+2.1
+2.9
+11.8
+11.7
-29 bp
-16.7
-15.6
(3) 2004 do not include IAS 39 effect
Restructuring Charges -28 -13.6
1,650
(4) Net of recovered costs
2005
-13
714
701
-97
-136
-244
280
280
34.9%
-1
-3
y/y % ch.3
-59.8
+2.0
+4.9
+3.4
-3.0
+24.7
+7.9
+1.6
+1.6
- 94bp
n.s.
n.s.
- -
456
CORPORATE BANKING(1) INVESTMENT BANKING(2)
(1) UBI + UBMC + Locat + other minor companies (2) UBM + TLX + ECS
62
CORPORATE BANKING(1): STRONG “CORE PERFORMANCE”
(1) UBI + UBMC + Locat + Other minor companies of the Corporate division
Good resilience of net interest income (+1.9% y/y)
NET INTEREST INCOME (excl. dividends, mln)
1,591
2004 2005
1,621 +1.9%
Strong loan growth (from 64.9 bn to 70.8 bn, +9.2% y/y) mainly driven by M/L term (+10.7%(2)) offsetting lower lending spreads (from 2.29% in 2004 avg. to 2.08% in 2005 avg. for UBI)
UBI’s share of wallet at 13.5% (vs 13.3% as of Dec04)
Excellent increase of net commissions (from 390 mln to 426 mln, +9.3%), mainly driven by corporate finance (+25 mln(3)), foreign trade (+17 mln(3)) and transaction services (+6 mln(3))
NET NON-INTEREST INCOME (mln)
692
2004 2005
751 +8.5%
(3) UBI Management accounts
Income from financial transactions at 173 mln (vs 180 mln in 2004, -4.1%), due to lower contribution of corporate derivatives
Strong focus on cost control: limited +2.9% growth of total operating expenses (722 mln vs 702 mln in 2004)OPERATING EXPENSES
C/I Ratio at 30.4% vs 30.7% in 2004
COST OF RISK(4) (bp)
76
2004 2005
58
-16 bp
671 mln contribution to consolidated net profit, +11.7% y/y (690 mln excl. restructuring charges, +10.8% y/y)
(4) Profit (loss) and net write downs on loans / Net customer loans as of 31.12
Reduction of total net write-downs on loans (410 mln vs 492 mln in 2004): 2005 benefiting from an extraordinary recovery on a large name accounted in 3Q05 and from the lack of provisions on Convertendo FIAT booked in 2004
Cost of risk at 58 bp; 62 bp net of the extraordinary recovery accounted in 3Q05
(2) BankIT Matrix data
+30 mln “other net revenues”, mainly thanks to good performance of Locat renting business
63
INVESTMENT BANKING(1): TOP-LINE GROWTH WITH ENHANCED DIVERSIFICATION OF THE REVENUE MIX AS MAIN DRIVER TO HIGHER CONTRIBUTION TO CONSOLIDATED RESULTS
Good revenue growth, driven by:TOTAL REVENUES (mln)
668
2004 2005
701+4.9%
COST/INCOME (%)
1 UBM + ECS + TLX
Excellent results in Investment Banking (120 mln(2), +56.4% y/y), mainly thanks to Structured Finance, Syndication and Equity Capital Markets
+1.8% increase of Financial Products – Sales & Trading (585(2) mln vs 575(2) in 2004); growth of institutional Derivatives and sales & trading on fixed income cash products totally offsetting lower contribution of corporate and retail derivatives
2 Management Accounts related to UBM-stand alone; balance (+16 mln in 2004, -4 mln in 2005) due to reconciliation of managerial with accounting data and to other companies (ECS, TLX)
33.9%
2004 2005
34.9%+94 bp
Enhanced diversification of revenue stream: weight of derivatives on total revenues down to 69.5%(2) (vs 75.5%(2) in 2004)
Increased contribution to consolidated net profit at 280 mln (+1.6% y/y, approx. +9% net of UBM London)
Efficiency confirmed at excellent levels: growth of total operating expenses (244 mln in 2005 vs 227 in 2004,
+7.9%) totally related to significant investments for start-up of UBM London
C/I ratio at 30.7% net of UBM London (-3.2% points vs 2004)
7.2% decrease of total operating expenses net of UBM London, mainly thanks to strict cost control on administrative expenses
64
Details on 2005 UCI standalone results
Divisional Reporting
Retail Division
Corporate & IB Division
Private Banking & AM Division
New Europe Division
ANNEXES
65
130
35
83
111
128
55
PRIVATE & ASSET MANAGEMENT DIVISION: STRONG REVENUE GROWTH DRIVEN BY INCREASING ASSETS AND MARGINS
Significant growth of Tot. Financial Assets (bn) and excellent net sales in 2005 Pioneer (Asset Management):
Net sales at 9.7 bn, vs 3.5 bn in 2004 AuM growth: + 22.2% y/y to 158.3 bn as at Dec05
TOTAL REVENUES
Up-front fees
Management & other fees
Performance fees(1)
NII & other
173203
209
Dec04 Sep05 Dec05
2004
1,185
1,372
2005
+15.1%
+15.8%
937
Strong improvement in margins thanks to product and asset mix:
Asset Mix (Pioneer): avg. weight of stocks and equity funds at 30.5% in 2005, up 303 bp y/y; avg. weight of hedge funds at 3.0% in 2005, up 20 bp y/y
(1) Net commissions, excluding performance fees, ITAS data
+21%+18.6% vs Dec04 excl. 4.3bn from AmSouth acquisition
Margins(1) (in bp of average AuM): up from 60.35 bp in FY04 to 60.84 bp in FY05; up from 60.58 bp in 3Q05 to 61.63 bp in 4Q05;
1,078
+18.5%+3.0% q/q
+2.6% q/q
Current FX
Constant FX
IAS, mln, constant FX
UPB + Xelion (Asset Gathering): Net sales of 5.9 bn, +117% y/y, of which 53% in
asset management products (vs 15% in 2004) UPB AuM: 63.1 bn as at Dec05, + 21.0% y/y Xelion AuM: 14.8 bn as at Dec05, + 22.5% y/y
66
BIG JUMP OF OPERATING INCOME IN 2005, +30% Y/Y, THANKS TO RISING REVENUES AND MARGINS IMPROVEMENT
All figures at unchanged FX
Revenue rising by 15.8% y/y, driven by sales of segregated accounts Focus Invest and Investment Program and by a clear improvement in the asset mix
Net income for the Group at 406 mln in 2005,+15.1% y/y (413 mln, +39.2% y/y excluding integration costs and previous year’s non-recurring fiscal benefits of approx. 61 mln)
Outstanding growth of gross operating income, +29.9% y/y, thanks to an excellent performance of revenue and costs rising at a much slower pace than top-line
OPERATING INCOME (IAS, mln)
2004 2005
445
578 +29.9%
C/I RATIO, %
2004 2005
62.557.9 -460 bp C/I ratio declining by 460 bp y/y; costs
growing by 7.2% y/y driven by staff expenses, which are affected by rising variable compensations related to great business and market performance
67
UPB
67
262
329
-198
-127
-76
131
5
82
87
60.3%
-6
PRIVATE & AM DIVISION: 2005 INCOME STATEMENT – BREAKDOWN BY COMPANY
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Operating income
Net income for the Group
Cost/Income Ratio
Total net provisions
Normalised Net income(3)
- of which: Staff costs
- of which: other admin. expenses
(ITAS, Euro mln)
Integration Costs
TOTAL DIVISION2
109
1,267
1,376
-796
-443
-341
580
-18
407
414
57.9%
-11
16
895
911
-447
-273
-164
464
-3
360
362
49.1%
-4
14
71
85
-116
-22
-91
-31
-14
-29
-29
136.5%
-
PGAM Group UniCredit Xelion Banca
26
40
66
-35
-22
-11
31
-1
22
22
53.0%
-1
UPB Subsidiaries
+UCI Lux
1 Balance due to rounding and elisions of intra-group dividends
2 Excluding integration costs
68
PRIVATE & AM DIVISION: 4Q05 AND FY05 INCOME STATEMENT
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating income
Integration Costs
Consolidated profit
Taxes
Consol. profit without integr. costs
Cost Income ratio, %
4Q05/3Q05 % ch.
4Q05
397
-88
159
-32
60.1%
-11
113
106
28
370
20054Q05/4Q04 % ch.
Y/y % ch.
+13.7
-1.2
+4.4
-22.3
+354bp
-
+4.7
-1.9
+8.8
+14.1
+15.4
-5.2
+8.9
n.m.
+239bp
+41.2
-13.5
-15.8
+0.7
+16.7
1,376
-341
580
-137
57.9%
-11
414
407
109
1,267
+15.8
+3.9
+29.9
+159.1
-460 bp
+41.2
+15.5
+15.1
+7.1
+16.6
(Euro mln - Data at current FX, % ch. at fixed FX)
- of which: Staff Costs -143 +32.4 +32.7 -443 +9.7
Operating Costs (incl. depr.) -239 +20.8 +20.2 -796 +7.2
- of which: Other admin. expenses
69(1) Including Repos
PRIVATE & AM DIVISION: DETAILS ON TOTAL FINANCIAL ASSETS Y/Y AND 4Q/3Q TRENDS
(bn - data at current FX)
Securities in custody
Direct deposits(1)
AUMs
PRIVATE & AM DIVISION TOTAL FINANCIAL ASSETS
Dec04
7.1
29.9
135.9
172.9
203.3
7.6
35.5
166.3
209.4
Sep05 Dec05% weight of AUM products 79.479.878.6
+3.0%
+18.6% ex AmSouth
AmSouth acquisition(2)
(2) AmSouth acquired by Pioneer on 26.09.05; AuM $ 5.17 bn (Eur 4.3 bn)
7.3
33.8
162.2
21.0%
REMINDER: % CH. AT CONSTANT FX
Dec05/Dec04: +18.5% Dec05/Dec04 excl. AmSouth: +16.1% Dec05/Sep05: +2.6%
70
(1) Balance due to rounding
Italy
New Markets
92,809
3,885
TOTAL PIONEER
Alternative Investments
129,614
3,830
7,404
1,941
9,688
219
International (ex-Italy) 7,888
1,322
AuM as at 31.12.2004
US in USD 34,096 -1,195
108,031
5,882
154,059
4,496
11,448
AuM as at 31.12.2005(1)
38,919
AuM as at 28.02.06(2)
109,656
33,473
12,306
6,249
161,684
4,579
39,750
FY05 Net sales
PIONEER GROUP: DETAILS ON NET SALES AND AUM TREND (Feb06)
(2) Provisional figures; balance due to Market Performance (including FX effect)
7,818
1,619
14,757
447
675
848
513
175
1,052
20
-168
532
-199
Net sales Feb06
FY05 Mkt. Perf.
(mln - Data at end of period FX)
4,293US 32,99125,032 -979 4,645
TOTAL PIONEER incl. AmSouth 158,352
(3) Data as of September 26, 2005, AmSouth acquisition’s date
129,614 9,688 14,757 161,6841,052
5,170
AmSouth acquisition(3)
4,293
71
Finanza & Futuro
Rasbank
Credem + Euromob.
8,044Credem + Euromob.
1 Calculated on average PFAs2 AUMs, Securities in Custody, Bancassurance and liquidity3 Ranking taking into account only the 10 largest Italian players by Total Financial Assets as at 31.12.2005
Source: Assoreti
Net Inflows:788 Mln,2nd in Italy
Data as at 31.12.05 – Mln
TOTAL NET INFLOWS 2 & 3
Xelion 1,858
Mediolanum 1,564
Azimut 1,837
Banca Generali 2,309
1,012
Credem + Euromob. 774
880Rasbank
Fideuram + SPI 1,175
Data as at 31.21.05
1,965 PFAs,5th in Italy
NUMBER OF PFAs
Fideuram + SPI 4,098
Mediolanum 3,977
3,569
Banca Generali 4,815
Finanza & Futuro 1,020
Bipielle Network
1,040
Banca SAI 1,448
1,041
Tot. Fin. Assets:~14.8 bn,5th in Italy
TOTAL FINANCIAL ASSETS
Fideuram + SPI 63,752
Mediolanum 24,654
Rasbank 21,714
11,498Azimut
8,486
Xelion 14,797
18,291
Fineco 7,645
Net Inflows per PFA1:2nd among Top-
Players
Data as at 31.12.05 – Mln
NET INFLOWS PER PFA 2 & 3
Azimut 2.01
Xelion 0.92
Credem + Euromob. 0.73
0.72
Mediolanum
0.47
Finanza & Futuro
0.28
0.24
Fideuram + SPI
0.13
Banca Generali
0.39
XELION 2005 PERFORMACE: SECOND BEST PLAYER IN NET SALES (13% MARKET SHARE) AND IN PRODUCTIVITY PER PFA
Rasbank
Xelion 1,964
Fineco 1,310
Fineco
Fineco
Banca Generali
Bipielle Network -0.09Bipielle Network 4,357
Finanza & Futuro 140
-98Bipielle Network
Data as at 31.12.05 – Mln
72
Details on 2005 UCI standalone results
Divisional Reporting
Retail Division
Corporate & IB Division
Private Banking & AM Division
New Europe Division
ANNEXES
73
22.8%(1)
2.3%(1)
2.4%(1)
Net interest income(2)
Net non interest income
Total revenues
Operating Costs(3)
Operating income
Net write-down of loans
Profit/loss on invest.
Net income
Taxes
(2) Including dividends
(3) Including depreciation
6.5%(1)
36.6%(1)
24.9%(1)
(1) Weight of the bank Total Revenues in FY05 on Division Total Revenues – only UCI’s portion; balance due to UniLeasing Romaniaand Xelion Poland
Net income for the Group
% ch. on 4Q04(4)
+32.8
+1.0
+19.6
+26.5
+8.3
+60.2
n.m.
-8.6
n.m.
-32.5
3.7%(1)
BREAKDOWNOF REVENUES
4Q05
330
184
514
-338
176
-37
40
101
-69
54
% ch. on 3Q05
+12.1
-14.3
+0.9
+32.9
-31.0
n.m.
n.m.
-53.0
+32.3
-65.5
FY05
1,174
754
1,928
-1,085
843
-101
57
592
-192
404
y/y % ch.(4)
+12.5
+9.9
+11.6
+11.7
+11.3
-12.9
n.m.
+12.5
+73.0
+9.9
Cost/Income ratio (%) +3.7 pp65.8 +16 pp 56.3 +14 bp
NEW EUROPE DIVISION: 4Q05 & FY05 INCOME STATEMENT
IAS, Euro mln
(4) 4Q04 & FY04 excluding IAS 32 & 39
NEW EUROPE DIVISION P&L (at unchanged year end 2003 FX, including Yapi Kredi in 4Q05)
o/w Staff costs +38.2-163 +28.5 -538 +13.7
o/w other admin. expen. +15.1-130 +38.0 -401 +10.7
74
NEW EUROPE DIVISION: SIGNIFICANT VOLUME GROWTH WITH POSITIVE IMPACT ON REVENUES INCREASE
STRONG LENDING GROWTH: +38.5%(2) Y/Y (+45.3% at current FX) …
Mortgages(3) (Euro mln)
Dec05
2,593
Sep05
2,7692,199
Dec04
+25.9%
Consumer credit(3) (Euro mln)
Dec05
2,091
Sep05
2,3271,597
Dec04
+45.7%
... AND FURTHER DEVELOPMENT IN MUTUAL FUNDS …
Customer Deposits (Euro bn)
Dec05
22.3
Sep05
26.421.8
Dec04
+20.9%(4)
Mutual Funds(5) (Euro mln)
Dec05
7,033
Sep05
7,544
4,982
Dec04
+51.4%
(1) 2004 figures excl. IAS 32 & 39
… SUSTAINING REVENUES GOOD PERFORMANCE
Net interest income (Euro mln) Net non interest income
(Euro mln)
Figures and % ch. at unchanged FX(1) – P&L & BS in IAS
% ch. at current FX
+20.6%
1,174
2005
1,045
2004
+12.5%(6)
y/y % ch.
+18.7%
754
2005
686
2004
+9.9%(7)
y/y % ch.
(5) New Europe Business Area of Pioneer is included at current FX; Yapi not incl.
(3) Management accounts in LAS (excl. Yapi)
(7) +5.9% excl. 1° time consol. of Yapi
(6) +8.2% excl. 1° time consol. of Yapi
(2) +23.2% excl. 1° time consol. of Yapi
(4) +6.7% excl. 1° time consol. of Yapi
75
Total Revenues +7.3%3 y/y, benefiting from strong lending growth (+11.6% incl. YKB)
Operating Costs +6.1%3 y/y, mainly due to higher variable costs and increase in n° of employee (+11.7% incl. YKB)
Cost/Income ratio to 55.5%3, -60 bp y/y (56.3%, +14 bp y/y incl. YKB)
IMPROVED ASSET QUALITY(4)
Improved coverage ratio of NPLs + Doubtful loans (to 75.2%, +4.5 pp vs. 01/01/05, 76.7% excl. YKB)
Lower weight of net NPLs + Doubtful on total net loans (to 4.0% vs. 5.7% as at 01/01/05, 3.8% excl. YKB)
IMPROVED OPERATING PERFORMANCE DRIVEN BY INCREASING REVENUES; FURTHER ASSET QUALITY IMPROVEMENT
STRONG PERFORMANCE OF OPERATING INCOME
Cost of risk (bp)
2005
82
2004
-19 bp
GOOD NET INCOME GROWTH
Operating Income (Euro mln)
Attributable Net income (Euro mln)
Excl. YKB & one off write
back in Zaba(5)
53
63
(5) Write-back of approx. 20 mln as release of funds for guaranteed loans
+19.6%
843
2005
759
2004
+11.3%2
y/y % ch.
+17.4%
404
2005
368
2004
+9.9%(6)
y/y % ch.
(1) 2004 figures excl. IAS 32 & 39
Figures and % ch. at unchanged FX(1) – P&L in IAS
% ch. at current FX (2) +8.8% excl. 1° time consol. of Yapi
(3) Excluding first time consolidation of YKB
(6) +9.1% excl. 1° time consol. of Yapi
(4) At current FX
76
NEW EUROPE DIVISION P&L (at unchanged year end 2003 FX, excluding Yapi Kredi)
(1) Including dividends(2) Including depreciation
NEW EUROPE DIVISION: 4Q05 & FY05 INCOME STATEMENT
Net interest income(1)
Net non interest income
Total revenues
Operating Costs(2)
Operating income
Net write-down of loans
Profit/loss on invest.
Net income
Taxes
Net income for the Group
% ch. on 4Q04(3)
+14.9
-13.8
+2.8
+6.3
-2.9
+8.8
n.m.
-10.0
+144.2
-36.3
4Q05
286
157
443
-285
159
-25
40
98
-68
51
% ch. on 3Q05
-2.8
-26.8
-12.9
+11.9
-37.7
n.m.
n.m.
-54.4
+29.6
-67.5
FY05
1,130
727
1,857
-1,031
826
-89
57
589
-191
401
y/y % ch.(3)
+8.2
+5.9
+7.3
+6.1
+8.8
-23.4
n.m.
+11.7
+71.4
+9.1
IAS, Euro mln
(3) 4Q04 & FY04 excluding IAS 32 & 39
+16.2-138 +8.6 -513 +8.2
-6.1-106 +12.5 -377 +4.1
o/w Staff costs
o/w other admin. expen.
77
(2) Including dividends(3) Including depreciation
NEW EUROPE DIVISION P&L (at current FX(1), including Yapi Kredi in 4Q05)
NEW EUROPE DIVISION: 4Q05 & FY05 INCOME STATEMENT
(4) 4Q04 & FY04 excluding IAS 32 & 39
Net interest income(2)
Net non interest income
Total revenues
Operating Costs(3)
Operating income
Net write-down of loans
Profit/loss on invest.
Net income
Taxes
Net income for the Group
% ch. on 4Q04(4)
+41.0
+7.6
+26.9
+33.7
+15.8
+66.7
n.m.
+0.9
n.m.
-23.6
4Q05
368
207
575
-377
198
-40
46
118
-75
63
% ch. on 3Q05
+12.4
-13.2
+1.6
+32.2
-29.4
n.m.
n.m.
-49.5
+32.4
-62.7
FY05
1,290
837
2,126
-1,198
928
-111
65
655
-210
441
y/y % ch.(4)
+20.6
+18.7
+19.8
+20.0
+19.6
-5.9
n.m.
+21.3
+85.8
+17.4
IAS, Euro mln
(1) Annual average exchange rates
+46.4-183 +27.9 -596 +22.4
+22.2-144 +37.0 -441 +19.0
o/w Staff costs
o/w other admin. expen.
78(1) +7.1% q/q excl. Yapi, +23.2% y/y (2) Management accounts in LAS (excl. Yapi)
NEW EUROPE DIVISION: 4Q05 & FY05 TREND IN VOLUMES
% ch. on
Sep05
Dec05(Euro mln)
y/y % ch. vs.
Net Customer Loans(1)
- o/w Pekao
Mortgages(2)
+20.4
+5.3
+38.5
+10.2
+6.8 +25.9
20,875
7,507
2,769
- o/w Pekao LC +9.5 +40.7840
Mutual Funds(4) +7.3 +51.47,544
- o/w Pekao(5) +6.6 +48.04,984
NET CUSTOMER LOANS
Dec05/01.01.05: KFS +62.2% (excl. Yapi), Zaba +21.8%
(5) Pioneer Pekao Investment Management
% ch. at unchanged FX
MUTUAL FUNDS in PEKAO: Market share(4): to 31.4% down 3.1 pp
y/y
(4) New Europe Business Area of Pioneer is included at current FX (excl. Yapi)
IAS
(3) Customer Deposits + Securities; excl. Yapi y/y % ch. +5.1%, q/q +3.2%
- o/w Pekao +4.4 +12.7
Direct Deposits(3) +18.3 +25.229,577
17,113
79
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
Cost/income
TOTAL(1)
1,290
837
2,126
-1,198
928
655
56.4%
Net write-down of loans -111
(1) Balance due to roundings, other small companies & adjustments to be IAS compliant
(IAS Euro mln)
(UCI stake)
- of which: Staff costs -596
- of which: Other costs -441
NEW EUROPE DIVISION: FY05 RESULTS BREAKDOWN BY BANK
UNI BANKA (77.2%)
23
23
46
-37
10
10
79.5%
3
-16
-15
BULBANK (86.1%)
82
34
115
-46
70
39.5%
-12
48
-17
-20
Group PEKAO (52.9%)
598
456
1,054
-586
468
55.6%
385
-56
-302
-204
262
164
425
-251
175
141
58.9%
-6
Group ZABA
(81.9%)
-124
-93
20
17
37
-29
8
1
77.5%
-14
-12
-7
263
116
380
-193
187
65
50.8%
-97
-75
-33
KFS(2) (50.0%)
(2) Consolidated with proportional method (50%)
32
25
57
-48
9
6
83.9%
-21
-17
-1
Zivno (100%)
UniCredit Romania (99.9%)
Banks’ data gross of consolidation adjustment
(3) Net of consolidation adjustment
Profit/loss on investments 650-060 5 0 1 0
At current FX (annual average)
Net income for the Group 441941205 114 1 65 6
80
VERY GOOD PERFORMANCE OF NE BANKS IN FY05
PEKAO
Revenue growth, with good performance of net interest income (+3.9% y/y), driven by improving asset mix (net loans: +10.2% y/y with strong sale of consume loans, +103.5% y/y, stock of mortgages(1) +40.7% y/y)
Costs under control with efficiency improvement (C/I to 55.6%, -71 pp y/y)
Further increase in Mutual Funds (stock +48.0% y/y, +6.6% q/q), improvement in sale structure with higher weight of balanced and equity MF
ZABA
Operating income: +3.0% y/y, mainly thanks to net commissions growth (+8.2% y/y) benefiting from increasing number of C/A packages and higher stock of Mutual Funds
Strong lending growth: net loans +21.8% y/y (o/w mortgages(2) +17.3% y/y, consumer loans(2) +20.4% y/y, corporate loans +24.4% y/y)
KFS
Operating income: +15.7% y/y (excl. Yapi Kredi first time consolidation), mainly thanks to net interest income (+23.2%, driven by volume growth) and net commissions (+16.4% mainly on MF and cards) growth
Significant lending growth: net loans +62.2% y/y, (o/w consumer loans(2) +114.3% y/y) Further development of fee generating products: Mutual Funds +26% y/y; ~9,300 cards and ~54,240
C/A packages sold in 4Q05
(1) Management accounts in LAS, only LC
IAS - % ch. at unchanged FX
(2) Management accounts in LAS, only bank
81(1) Including dividends (2) Including depreciations
CONSOLIDATED INCOME STATEMENT: ZAGREBACKA
(Euro mln)
Net interest income(1)
Net non interest income
Total revenues
Operating costs(2)
Operating income
Net write-down of loans
Net income
Profit/loss on investments
Taxes
4Q05
59
32
91
-65
26
-0
26
+5
-1
23
% ch. on 3Q05
-13.9
-52.0
-32.8
+5.2
-65.1
n.m.
-63.5
n.m.
-92.9
-60.3
FY05
253
158
411
-243
169
-6
136
+5
-27
114
y/y % ch.(4)
-2.5
+25.3
+6.6
+9.2
+3.0
-58.6
+6.1
-13.7
+5.8
+8.4
Data gross of consolidation adjustment
IAS% ch. at unchanged FX
(4) 4Q04 & FY04 excluding IAS 32 & 39
Net income for the Group at current FX(3)
(3) Yearly average
Net income for the Group 22 -60.4 110 +7.1