Consolidated First Half Financial Report as at 30 June 2021

Consolidated First Half Financial Report as at 30 June 2021Consolidated First Half Financial Report as at 30 June 2021
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Contents
UniCredit Consolidated first half financial report as at 30 June 2021 3
Board of Directors, Board of Statutory Auditors and External Auditors 5 Preliminary notes 7 CONSOLIDATED FIRST HALF FINANCIAL REPORT AS AT 30 JUNE 2021 9 Glossary 245 Contacts 257
Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is non-existent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancy between data disclosed in this report are solely due to the effect of rounding.
Contents
Contents
Contents
Contents
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4 Consolidated first half financial report as at 30 June 2021 UniCredit
UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €21,133,469,082.48 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007
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Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2021
Board of Directors, Board of Statutory Auditors and External Auditors
Board of Directors Pietro Carlo Padoan Chairman Lamberto Andreotti Deputy Vice Chairman Andrea Orcel CEO Vincenzo Cariello Directors Elena Carletti Jayne-Anne Gadhia
Jeffrey Alan Hedberg Beatriz Lara Bartolomé
Luca Molinari Maria Pierdicchi
Board of Statutory Auditors
Stefano Porro Manager in charge of preparing the financial reports
Deloitte & Touche S.p.A. External Auditors
Throughout 2020, we focused on protecting our people: we provided them with millions of PPE items and fast IT upgrades, rolling out new laptops and remote access to around 80,000 UniCredit employees, to make sure they could work safely and effectively.
Do the right thing! For our Colleagues
PROTECTING OUR PEOPLE To best understand what our people and their families needed in order to face the Covid-19 crisis, UniCredit created a Family Board: the 20-person team meets regularly to define solutions and recommendations in terms of flexibility, wellbeing and other support (i.e. homeschooling/ homework).
Preliminary notes
Preliminary notes
General aspects This Consolidated first half financial report was prepared pursuant to the article 154-ter, paragraph 2 of the Legislative Decree No.58 of 24 February 1998, according to IAS/IFRS international accounting standards, in compliance with the requirements of IAS34 Interim Financial Reporting, in the condensed version provided for in paragraph 10, instead of the full reporting provided for annual financial statements. The Consolidated first half financial report includes: • the Consolidated interim report on operations using reclassified Consolidated accounts formats, including not only comments on the results for the
period and on other main events, but also the additional financial information required by Consob provisions; • the Consolidated accounts in line with Banca d’Italia templates as prescribed by Circular 262 dated 22 December 2005 (and subsequent
amendments); • the Explanatory notes which include both the detailed information required by IAS34 stated according to the formats adopted in the financial
statements and the additional information required by Consob and the information deemed useful for providing a better picture of the corporate standing;
• the Condensed interim consolidated financial statements certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Auditor’s Review Report; • the Annexes. UniCredit’s website also contains the press releases concerning the main events of the period and the Market presentation of Group results. The acronyms/abbreviations not explained in the "Glossary" are reported in full the first time they are mentioned.
Preliminary notes
Preliminary notes
Preliminary notes
Preliminary notes
Preliminary notes
Preliminary notes
Preliminary notes
Preliminary notes
With over 16 million clients in 13 countries, we worked harder than ever in 2020 to help all our clients face new challenges: from billion euro funding programmes for multinational companies to mentoring new startup businesses, UniCredit is committed to being part of the solution.
€10 MILLION OF NEW FINANCING FOR A 100-YEAR OLD PASTA PRODUCER This loan was set up to meet the working capital needs of
ragnano based astifi io i artino t was also the first
large loan issued under Italy’s guaranteed loans programme.
Do the right thing! For our Clients
Consolidated first half financial report as at 30 June 2021
CONSOLIDATED FIRST HALF FINANCIAL REPORT AS AT 30 JUNE 2021
Consolidated interim report on operations 15 Introduction and Group highlights 15
Introduction to the Consolidated interim report on operations of UniCredit group 15 Group highlights, alternative performance indicators and other measures 15
Reclassified consolidated accounts 18 Summary results by business segments 25 Group and UniCredit share historical data series 26 Group results 28
Macroeconomic situation, banking and financial markets 28 Main results and performance for the period 31 Capital and value management 38
Principles of value creation and capital allocation 38 Own Funds 39 Capital strengthening 51 Shareholders’ equity attributable to the Group 51
Contribution of the sector of activity to the results of the Group 52 Other information 55
Group activities development operations and other corporate transactions 55 Organisational model 58 Conversion of deferred tax assets (DTAs) into tax credits 59 Certifications and other communications 59
Subsequent events and outlook 60 Subsequent events 60 Outlook 61
Condensed interim consolidated financial statements 63 Consolidated accounts 63
Consolidated balance sheet 63 Consolidated income statement 64 Consolidated statement of other comprehensive income 65 Statement of changes in the consolidated shareholders’ equity 66 Consolidated cash flow statement 68
Explanatory notes 71 Part A - Accounting policies 71
A.1 - General 71 Section 1 - Statement of compliance with IFRS 71 Section 2 - General preparation criteria 71 Section 3 - Consolidation scope and methods 74 Section 4 - Events subsequent to the reference date 99 Section 5 - Other matters 100
A.2 - Main items of the accounts 106 A.3 - Information on transfers between portfolios of financial assets 106 A.4 - Information on fair value 106
Part B - Consolidated balance sheet 117 Assets 117
Section 2 - Financial assets at fair value through profit or loss - Item 20 117 Information about the units of Atlante Fund and Italian Recovery Fund 118 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 119
Section 3 - Financial assets at fair value through other comprehensive income - Item 30 120
Information about the shareholding in Banca d'Italia 120 Section 4 - Financial assets at amortised cost - Item 40 121 Section 10 - Intangible assets - Item 100 122 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 123
Liabilities 125 Section 1 - Financial liabilities at amortised cost - Item 10 125 Section 2 - Financial liabilities held for trading - Item 20 126 Section 3 - Financial liabilities designated at fair value - Item 30 127 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 127 Section 10 - Provisions for risks and charges - Item 100 128 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 130
Part C - Consolidated income statement 132 Section 1 - Interest - Items 10 and 20 132 Section 2 - Fees and commissions - Items 40 and 50 133 Section 3 - Dividend income and similar revenues - Item 70 134 Section 4 - Net gains (losses) on trading - Item 80 135 Section 5 - Net gains (losses) on hedge accounting - Item 90 135 Section 6 - Gains (Losses) on disposal/repurchase - Item 100 136 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 137 Section 8 - Net losses/recoveries on credit impairment - Item 130 138 Section 12 - Administrative expenses - Item 190 139
Contributions to Resolution and Guarantee Funds 140 Guarantee fees for DTA conversion 141
Section 13 - Net provisions for risks and charges - Item 200 142 Section 16 - Other operating expenses/income - Item 230 143 Section 25 - Earnings per share 144
Part E - Information on risks and hedging policies 145 Introduction 145
Section 1 - Risks of the accounting consolidated perimeter 152 Quantitative information 152
A. Credit quality 152 A.1 Non-performing and performing credit exposures: amounts, write-downs, changes, distribution by business activity 152
Section 2 - Risks of the prudential consolidated perimeter 153 2.1 Credit risk 153
Qualitative information 153 1. General aspects 153 2. Credit risk management policies 154 3. Non-performing credit exposures 166 4. Commercial renegotiation financial assets and forborne exposures 169
Quantitative information 170 Credit quality 170 Distribution and concentration of credit exposures 171 Credit risk measurement models 175
2.2 Market risk 176 Risk management strategies and processes 176 Structure and organisation 179 Risk measurement and reporting systems 180 Hedging policies and risk mitigation 181 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 181 2.2.1 Interest rate risk and price risk - Regulatory trading book 186
Qualitative information 186 Quantitative information 187
2.2.2 Interest rate risk and price risk - Banking book 189 Qualitative information 189
2.2.3 Exchange rate risk 191 Qualitative information 191
Credit spread risk 191 Stress test 192
2.4 Liquidity risk 194 Qualitative information 194
2.5 Operational risks 201 Qualitative information 201
A. General aspects, operational processes and methods for measuring operational risk 201 B. Legal risks 206 C. Risks arising from employment law cases 212 D. Risks arising from tax disputes 212 E. Other claims by customers 214
Quantitative information 215 2.6 Other risks 217
Other risks included in Economic Capital 217 1. Business risk 217 2. Real estate risk 217 3. Financial investments risk 217
Reputational risk 218 Top and emerging risks 219
1. The Covid-19 pandemic evolution impacts 219 2. Macroeconomic and geo-political challenges 220 3. The climate-related and environmental risks 220 4. Cyber Security Risk 221 5. Developments in the Regulatory environment 221
Part F - Consolidated shareholders’ equity 223 Section 1 - Consolidated shareholders’ equity 223
A. Qualitative information 223
Part H - Related-party transactions 224 Introduction 224 Related-party transactions 225
Part L - Segment reporting 228 Organisational structure 228 A - Primary segment 230
Certification 233 Report of the External Auditors 235 Annexes 239
Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedule 239
UniCredit is proud to support communities in all of its countries: we launched formal and informal initiatives, with a wide range of volunteering activities and donations, employees and customers raised and donated millions of euros.
“Your generous contribution will help, through our work, the entire Italian population forced to face this moment of emergency linked to the spread of the new Coronavirus. Thanks to your donation, the Italian Red Cross continues to expand, investing in services, resources and training for volunteers and operators to be alongside those who need it most”. Francesco Rocca President of the Italian Red Cross
Do the right thing! For our Communities
Consolidated interim report on operations
Introduction and Group highlights
Consolidated interim report on operations Introduction and Group highlights
Introduction to the Consolidated interim report on operations of UniCredit group This Consolidated interim report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as the commented “Group results”. To further illustrate the results of the period, the Consolidated interim report on operations includes Reclassified consolidated accounts prepared using the same criteria of previous quarterly reports. The information included in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Economic Value Added (EVA), Return On Tangible Equity (ROTE), Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, Return On Allocated Capital (ROAC), Return On Assets (ROA), Cost of risk. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Condensed interim consolidated financial statements, in the Consolidated interim report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For the disclosure relating to related-party relations and transactions, it shall be referred to the Part H - Related-party transactions, Explanatory notes - Part H of the Condensed interim consolidated financial statements. Complete description of risks and uncertainties that the Group has to face in the current market situation, reference shall be made to the specific paragraph of this Consolidated interim report on operations and to the Part E - Information on risks and hedging policies, Explanatory notes of the Condensed interim consolidated financial statements.
Group highlights, alternative performance indicators and other measures
Income statement
Operating income 9,084 8,544 + 6.3% of which:
- net interest 4,383 4,887 - 10.3% - dividends and other income from equity investments 237 164 + 44.7% - net fees and commissions 3,362 2,997 + 12.2%
Operating costs (4,874) (4,933) - 1.2% Operating profit (loss) 4,209 3,610 + 16.6% Net write-downs on loans and provisions for guarantees and commitments (527) (2,198) - 76.0% Net operating profit (loss) 3,682 1,412 n.m. Profit (Loss) before tax 2,578 (2,007) n.m. Group net profit (loss) 1,921 (2,286) n.m.
The figures reported in this table refer to the reclassified income statement. The amounts related to year 2020 differ from the ones published at that time. For further details, it shall be referred to the “Reconciliation principles followed for the reclassified income statement”. Annex 1 includes the reconciliation between the reclassified accounts and the mandatory reporting schedules.
Income statement
Income statement
Income statement
Income statement
Balance sheet
AMOUNTS AS AT 06.30.2021 12.31.2020 % CHANGE
Total assets 950,046 931,456 + 2.0% Financial assets held for trading 78,991 72,705 + 8.6% Loans and receivables with customers 438,401 450,550 - 2.7% Financial liabilities held for trading 49,798 47,787 + 4.2% Deposits from customers and debt securities issue 601,689 600,964 + 0.1%
of which: - deposits from customers 505,716 498,440 + 1.5% - debt securities issue 95,973 102,524 - 6.4%
Group shareholders' equity 61,356 59,507 + 3.1%
The figures reported in this table refer to the reclassified balance sheet. For further details, it shall be referred to the “Reconciliation principles followed for the reclassified balance sheet”. Annex 1 includes the reconciliation between the reclassified accounts and the mandatory reporting schedules.
Profitability ratios
H1 2021 2020 CHANGE
EPS(*) (€) 1.698 (2.109) 3.807 Cost/Income ratio(**) 53.7% 57.7% - 4.1% EVA(***) (€ million) 153 (2,016) + 2,169 ROTE(****) 7.5% -8.9% + 16.3% ROA(*****) 0.4% -0.5% + 0.9%
Notes: (*) Annualised figure. Earnings per share. For further details refer to Part C - Section 25. (**) Ratio between operating expenses and operating income. (***) Economic value added calculated as difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (****) Return On Tangible Equity annualised ratio between the net profit and the average net tangible equity. (*****) Annualised figure. Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to the Art.90 of CRDIV (Capital Regulation Directive).
Risk ratios
AS AT
06.30.2021 12.31.2020 % CHANGE
Net bad loans to customers/Loans to customers 0.4% 0.4% - 0.0% Net non-performing loans to customers/Loans to customers 2.1% 1.9% + 0.2%
For the amounts it shall be referred to the table “Loans to customers - Asset quality” in the paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated interim report on operations.
Balance sheet
H1 2021 2020 CHANGE
Risk ratios
AS AT
06.30.2021 12.31.2020 % CHANGE
Balance sheet
H1 2021 2020 CHANGE
Risk ratios
AS AT
06.30.2021 12.31.2020 % CHANGE
Balance sheet
The figures reported in this table refer to the reclassified balance sheet. For further details, it shall be referred to the “Reconciliation principles followed for the reclassified balance sheet”. Annex 1 includes the reconciliation between the reclassified accounts and the mandatory reporting schedules. Profitability ratios
H1 2021 2020 CHANGE
Risk ratios
AS AT
06.30.2021 12.31.2020 % CHANGE
Balance sheet
The figures reported in this table refer to the reclassified balance sheet. For further details, it shall be referred to the “Reconciliation principles followed for the reclassified balance sheet”. Annex 1 includes the reconciliation between the reclassified accounts and the mandatory reporting schedules. Profitability ratios
H1 2021 2020 CHANGE
Risk ratios
AS AT
06.30.2021 12.31.2020 % CHANGE
Staff and Branches
Employees(*) 80,879 82,107 -1,228 Branches(**) 3,364 3,490 -126
of which: - Italy 2,118 2,229 -111 - Other countries 1,246 1,261 -15
Notes: (*) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. (**) Retail branches only.
Transitional capital ratios
AS AT 06.30.2021(*) 12.31.2020(*) CHANGE
Total Own Funds (€ million) 67,417 67,464 - 47 Total risk-weighted assets (€ million) 327,714 325,665 + 2,049 Common Equity Tier 1 Capital Ratio 16.11% 15.96% + 0.1% Total Capital Ratio 20.57% 20.72% - 0.1%
Note: (*) Transitional Own Funds and capital ratios including transitional adjustments according to the applicable percentages. Furthermore, starting from 30 June 2020, UniCredit gr

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Consolidated First Half Financial Report as at 30 June 2021