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UniCredit: results of 3rd quarter and first 9 month of 2005


Board approves consolidated quarterly interim report as at 30 September 2005 based on IAS/IFRS as indicated in Attachment 3D of Italian Issuers' Regulation.
2004 results do not include application of IAS 32 and 39.

• Strong growth of net profit:
       € 2,118 million in first 9 months of 2005 (+28.4% YoY), € 676 million in 3rd quarter of 2005 (+32. 5% YoY)
• Outstanding operating results featuring quality revenue growth (total revenues of € 8,278 million, +9.1% YoY in first 9 months (9M05), +12.8% YoY in the 3rd quarter (3Q05). Specifically:
      Net interest income (excl. dividends) of € 3,974 million (+11.9% vs. 9M04, +14.4% YoY in 3Q05)
      Net commission income of € 3,204 million (+11.3% vs. 9M04, +19.6% YoY in 3Q05)
      Operating profit of € 3,878 million (+15.6% vs. 9M04, +23.4% YoY in 3Q05)
• Improvement of Cost/Income ratio to 53.2% (vs. 55.8% in September 2004)
• Continued customer lending growth (€ 153.2 billion, +9.1% vs. January 1st 2005)
• Good asset quality: significant improvement of coverage ratio for total doubtful loans (from 56.7% at start of 2005 to 57.1% in September 2005)
• Strong growth of Group's assets under management to € 152 billion (+18.9% since beginning of year) with strengthening of mutual fund market share in Italy to 15.30% in October 2005 (+76 bp vs. December 2004)

Today the Board of Directors of UniCredit approved consolidated results as at September 30th 2005 (1) prepared according to the international financial reporting and accounting standards (IAS/IFRS) adopted by the European Community, with application of IAS 32 and 39 as from January 1st 2005. The main difference in the items shown in financial statements compared with the accounting standards used previously (Italian GAAPs) and quantitative reconciliations are shown later on in the attachments.
The first 9 months of the year (9M05) ended for the Group with net profit of € 2,118 million (mn), with a 28.4% increase over the same period in the previous year (9M04). Performance in the third quarter (3Q05) confirmed the excellent bottom-line trend, with net profit of € 676 mn, +32.5% vs. 3Q04.
Annualised ROE rose to 23.1%, compared with 18.1% in 9M04. Part of the increase - calculated as being just over one percent point - was due to application of IAS 39 to equity.
In 3Q05 the Group's total revenues grew by 12.8% YoY (+11.5% at constant exchange rates), faster than in the first half (1H05). Total revenues in 9M05 thus rose to € 8,278 mn, with an increase of 9.1% vs. 3Q04 (+7.6% net of foreign exchange (forex) effect). This trend was underpinned by the positive performance both of net interest income (€ 4,154 mn, +11.5%, and +9.9% at constant exchange rates) and of net non-interest income (€ 4,124 mn, +6.8%, and +5.4% net of the forex effect). Net non-interest income featured acceleration of the YoY growth rate in 3Q05, whilst net interest income featured a trend substantially aligned with that of the first part of the year.
Application of IAS 39 as from January 1st 2005 partly makes comparison with the previous year less meaningful within total income because the standard's application benefited net interest income to the detriment of net non-interest income, with an overall positive impact of some € 28 mn.
Net interest income in 9M05, amounting to € 4,154 mn, increased by 11.5% vs. 9M04 (+9.9% net of the forex effect), driven by growth both of net interest  (+11.9%) and by dividends and other income from equity investments (+3.4%). 3Q05 alone featured growth of 11.7% YoY and of 14.4% in the case just of net interest. The progress of net interest is explained by the marked growth of volume intermediated, the effect of which was only partly absorbed by narrowing of the spread between loan and deposit rates caused, in  particular, by the higher incidence of bonds among liabilities.
Improvement of net interest was partly ascribable to the effects of IAS 39 application, calculated as being about € 58 mn. The most significant impact relates to higher interest on the stock of doubtful loans - previously written down also to allow for the financial effect of their delayed collection (time factor) - that accrues as the dates of presumable collection draw closer. A further positive impact, albeit of minor entity, stems from inclusion in amortised cost calculations of some types of loan fees. These positive effects are counterbalanced by higher provision for loan impairment in the period (about € 85 mn), which takes into account the aforementioned financial effect for deferred collections of new doubtful loans.
Customer loans - € 153.2 billion (bn) - featured a major increase as at the end of September vs. the beginning of the year (+9.1%), with growth also vs. June (+1.8% in the quarter).
Notable contributors to this increase were mortgages, which - considering also securitised contracts - increased by about 13% vs. the beginning of the year. There was also an increase in leasing, which grew by 14.8% in 9M05, in a particularly dynamic market where the driver was the real estate segment. Growth was also significant, albeit at a lower level, in the case of current accounts (+7.5% since the beginning of the year) and advances and other loans (+5.3% in the same period).
The market share of the Group's business units in Italy, although not taking into account the loan securitisation undertaken by UniCredit Banca in 1H05, nevertheless remained close to 2004 year-end levels (10.77% vs. 10.83% at year-end). Considering also the some € 3 bn of mortgages securitised, the market share of total loans would have increased by about 15 bp in 9M05 (to 10.98%), with a substantially aligned increase for the two short- and medium-/long-term components.
Doubtful loans (€ 4,280 mn) increased in total by € 273 mn vs. the beginning of the year (+6.8%). This was mainly due to restructured loans (€ +127 mn) - which felt the effects of the new classification rules introduced by the Bank of Italy in 1H05. These require that all new lines of credit issued to parties possessing previously restructured lines must, in turn, be classified among restructured loans. Non-performing and watchlist loans - substantially stable in 3Q05 - increased in total by 4.1% vs. the beginning of the year.
The total doubtful loans/total loans ratio as at the end of September was down vs. the beginning of the year (2.79% vs. 2.85%), with improvement of the coverage ratio to 57.1% vs. 56.7%.
Going into greater detail, the ratio of non-performing loans to total loans decreased to 1.42% vs. 1.47% at the beginning of the year, with a coverage ratio of 68.2% (vs. 67.8% in January 2005).
Direct deposits amounted to € 163.8 bn, € 2.3 bn higher than in June and with a 10.5% increase since the beginning of the year. Amounts due to customers - i.e. customer accounts (€ 99.4 bn), which, following adoption of IAS, no longer include the more volatile part of repurchase agreements (repos), now reclassified among other trading liabilities, increased by 1.0% in the quarter and, notwithstanding adverse seasonality, by 4.6% compared with the beginning of the year. Debt securities in issue totalled € 64.4 bn and increased by 2.1% in 3Q05 and by 21.0% vs. the beginning of the year. The increase was basically due to the bond issues undertaken by the Group parent company (approximately € 7.2 bn since the beginning of the year) with the aim of financing the Group's development plans in a balanced manner as regards medium-/long-term lending. The total amount of bonds in fact rose to € 33.7 bn vs. € 23.7 bn as at the end of December 2004 (+42.4%).
Indirect deposits amounted to € 286.3 bn, with an increase of 5.4% in 3Q05 and of 13.1% vs. December 2004. Within this segment, administered assets, totalling € 136.7 bn as at the end of September, increased by 2.2% vs. June and by 6.6% vs. the beginning of the year, whilst managed assets, totalling € 149.6 bn, grew by 8.4% in the quarter and by 19.7% in 9M05.
Net non-interest income, also thanks to the result achieved in 3Q05 (+14.0% vs. 3Q04), totalled € 4,124 mn as up to the end of September, growing by 6.8% vs. 9M04 (+5.4% at constant exchange rates). This growth, driven by development of net commissions, was dampened by the adverse effects of IAS 39 application, both on commissions - for the portion included in the amortised cost calculation - and on the net trading result, in particular due to different accounting treatment of gains on the available-for-sale (AFS) portfolio (which no longer impact profit or loss until such time as when they are actually realised), partly offset by the positive impact on valuation of the Fiat mandatory convertible loan. The total negative impact on non-interest income of IAS 39 application as up to the end of September was € 30 mn.
Net commissions as at the end of September totalled € 3,204 mn, with an 11.3% increase vs. 9M04. This growth was driven both by wealth management and securities in custody fees - which grew by 13.6% vs. September 2004 - and by commissions for other activities (+8.7% in total vs. 9M04), among which we note an increase in those for current accounts, loans and guarantees (+7.5% YoY) thanks to the results achieved by UBM in its loan origination arrangements and syndication. The trend in net commissions in 3Q05 (€ 1,111 mn) confirmed the YoY growth trend, with progress of 19.6% vs. 3Q04.
Among wealth management and securities in custody fees, there was significant growth of those for securities dealing and placement (+11.4% YoY), underpinned by the activity of the Group's investment bank, and of those for managed discretionary accounts (+55.4% YoY) - confirming the success of the customisable lines launched in 2004. Lastly, progress was shown also by fees for investment funds (+12.8% vs. 9M04), relating to the increase in inflows and assets and to the increased share of equity funds, and those on insurance product sales (+12.1% YoY) reflecting the upturn in sales after the downturn reported in 2004.
In 9M05 net trading, hedging, and fair-value income (€ 746 mn) was down by 8.6% vs. 9M04, following the physiological stabilisation experienced in 2004 after a 4-year period of outstanding growth. This trend is mainly explained by the decrease of derivative sales to corporate customers and, to a lesser extent, to lower bond-structuring revenues in the retail segment.
Operating costs, which totalled € 4,400 mn, increased vs. 9M04 by 3.9% (+2.5% at constant exchange rates). This increase is largely explained by stronger growth of UCI New Europe banks, which operate in economies generally featuring higher inflation rates.
Within operating costs, staff costs (€ 2,622 mn, +5.1% YoY, +3.9% at constant exchange rates) increased mainly because of higher costs relating to the reward system and to the impact on 9M05 of the recent renewal in Italy of the national labour contract for the banking industry.
The increase in other administrative expenses, net of charge-backs, was 3.8% vs. 9M04 (+2.1% at constant exchange rates), and was largely due to advertising, maintenance and instalments for plant and equipment, and to rental costs. The increase in rental costs is partly explained by the use of rented premises following the sale of some properties during 2004 and therefore also relates to the reduction in depreciation costs.
Total depreciation & amortisation (€ 359 mn) was down by € 13 mn (-3.5% YoY vs. 9M04).
The cost/income ratio in 9M05 thus improved to 53.2% vs. 55.8% in 9M04.
The Group's operating profit as up to the end of September thus amounted to € 3,878 mn, increasing by +15.6% YoY (+14.1% at constant exchange rates). 3Q05 alone ended with a more marked increase, i.e. +23.4% vs. 3Q04.
Positive operating profit performance was enhanced by the growth of net income from investment securities, which, thanks to the capital gain of € 200 mn on sale of the equity interest in the "Serenissima" motorway (Autostrada Brescia-Verona-Vicenza-Padova SpA), totalled € 258 mn as at the end of September 2005, as opposed to € 28 mn in 9M04.
The higher contribution of net income from investments was dampened by the increase in provisions for liabilities and of net provisions for impairment and for guarantees and commitments.
Provisions for risks and charges in fact amounted to € 92 mn as at the end of September, vs. € 52 mn in 9M04. The increase was primarily attributable to the Corporate Division for revocatory actions and other litigation underway.
Net write-downs of loans and provisions for guarantees and commitments totalled € 676 mn vs. € 660 mn in 9M04 (+2.4%). The increase is explained by the impact of IAS 39 application, amounting to approximately € 85 mn and mainly due to the financial effect of the time factor for projected collections of doubtful loans.
Profit before tax thus rose to € 3,368 mn as at the end of September, growing by +26.1% over 9M04.
Income tax for the period of € 1,090 mn increased by 22.9% vs. 9M04, with an incidence of 32.4% on pre-tax profit, lower than the 33.2% of 9M04, mainly due to the presence of higher capital gains on fiscally neutral equity interests.
Profit after tax thus amounted to € 2,278 mn, with a 27.8% increase vs. 9M04.
Minority interests' profit as at the end of September totalled € 160 mn, up by € 27 mn vs. September 2004, basically due to the higher profit of the Pekao Group.
The Group portion of net profit for the period therefore amounted to € 2,118 mn, growing by +28.4% vs. € 1,650 mn in 9M04.
Shareholders' equity as at September 30th 2005 totalled € 15,707 mn (€ 14,373 mn as at September 2004, +9.3%). The main effects on shareholders' equity of first-time application of IAS 39 as of January 1st 2005 were (a) reduction of reserves for discounting of doubtful loans (about € 600 mn) and (b) creation of a reserve (about € 1,150 mn) for fair-value measurement of AFS financial assets and cash-flow hedges. This latter reserve is not considered in ROE calculation because the changes in fair value of the assets concerned do not go through profit and loss accounts.
The Tier 1 ratio as at the end of September 2005 was 7.79% (vs. 7.94% as at December 2004) whilst the Total Capital Ratio was 10.60% (vs. 11.64% in December 2004) .

As at the end of September 2005 the Group's organisation  (3) consisted of a staff of 69,331 employees (-181 heads vs. December 2004, -1.067 heads vs September 2004) and of a network of 4,383 branches (-59 branches vs. the beginning of the year).
Below, we analyse the key highlights of the Group Divisions' income statements and balance sheets.

Retail Division

As up to the end of September 2005 the Retail Division reported net profit for the period of € 546 mn (+36.5% vs. September 2004).
Total revenues in 9M05 amounted to € 3,301 mn, up by 11.2% vs. 9M04, thanks to the positive contribution of both net interest income and of commissions and other net income.
Net interest income rose to € 1,861 mn (+10.6% vs. September 2004) thanks to the marked growth in volume (customer loans of € 60 bn, +9.8% since the beginning the year). This amply offset the effect of the narrowing of spread between average loan and deposit rates. The quarterly pace of net interest income was positive, compared with 3Q04 (+8.5%), once again to be related to the volume effect. 
Robust lending growth was driven by the medium-/long-term segment, up by 12.6% vs. December 2004, thanks in particular to mortgages which featured new flows of € 6.6 bn in 9M05. Consumer credit also grew strongly.
On the asset quality front, the Division's total net doubtful loans amounted to € 1.7 bn, +10.6% vs. December 2004, with a net doubtful loans/total net loans ratio of 2.9%, substantially stable vs. 2004 year-end. The net non-performing loans/total net loans ratio was 1.42% (vs. 1.35% as at 2004 year-end).
Direct deposits rose to € 71.3 bn (+6.7% since the beginning of the year, +1.4% vs. June 2005), of which € 47 bn consisting of customer deposits.
Net non-interest income rose to € 1,440 mn (+12% vs. September 2004). The 3Q05 result (€ 475 mn) showed good growth over 3Q04 (€ +38 mn) - mainly thanks to higher sales of investment products and to management fee growth.
There was a positive trend also for indirect deposits, which topped € 112 bn in September 2005, growing by +6.7% vs. the beginning of the year and by +2.1% vs. June 2005). Growth came both from managed assets (+10.9% since the beginning of the year, +4.4% vs. June 2005) - mainly thanks to the contribution of managed discretionary accounts and bancassurance - and administered assets (+2.4% YoY in 9M05 and substantially stable in 3Q05).
Operating costs totalled € 2,076 mn, with a marginal increase over 9M04 (+1.0% YoY). 3Q05 (690 mln) shows a decrease of operating costs vs. 3Q04 (-0.3% YoY).
Staff costs (€ 1,135 mn) increased by 0.4% vs. 9M04, with improvement in 3Q05 when these costs decreased to less than those of 3Q04. This improvement was ascribable to staff rationalisation that more than offset the increases expected for 2005 (renewal of collective labour contract, higher costs for reward system).
Other operating costs in 3Q05 amounted to € 319 mn and featured a slight YoY increase (+0.9%) caused by a combination of lower amortisation due to lower project investments and higher indirect taxes (stemming from the 2005 Italian Budget Law) not recovered from customers.
The cost/income ratio as at September 30th 2005 was 62.9%, as compared with 69.3% in September 2004.
Operating profit rose to € 1,225 mn, growing by +34.3% over 9M04. Analysis of 3Q05 also reveals outstanding growth (+27.5% vs. 3Q04).
Provisions and net write-downs of loans amounted to € 296 mn (vs. € 217 mn in September 2004). The increase - partly due to the impact of IAS 39 application with discounting of doubtful loans to present value - is also explained by the increase in lending volume.
As at September 30th 2005 the Retail Division had 24,360 employees (-738 vs. 2004 year-end and -860 in the 12 months) and a retail-banking network of 2,656 branches (-86 vs. December 2004).

Corporate & Investment Banking Division

Net profit achieved by the Corporate and Investment Banking Division in 9M05 amounted to € 770 mn, growing by +9.7% vs. 9M04.
Total revenues amounted to € 2,396 mn (+5% YoY).
Net interest income progressed to € 1,211 mn in 9M05, growing by 3.9% YoY, thanks to positive performance of the Division's customer loans (€ 71.4 bn, +7.5% since the beginning of the year).
The Division's net doubtful loans amounted to € 1.8 bn (+18.3% vs. December 2004) and net non-performing loans to € 1.0 bn (+5.7% vs. 2004 year-end). The trend in doubtful loans was also partly due to changes occurring in regulatory requirements concerning doubtful-loan classification. More specifically, in 2005 some positions have been classified as restructured that, under previous regulations, were classified in the performing-loan category.
The net doubtful loans/total net loans ratio was 2.57% (vs. 2.34% in December 2004) whilst the net non-performing loans/total net loans ratio was 1.42% (vs. 1.45% at 2004 year-end).
The Corporate Division's customer accounts totalled € 15.2 bn, growing by +2.8% since the beginning of the year (+3.2% in 3Q05).
Net non-interest income amounted to € 1,185 mn as up to the end of September 2005, up by +6.3% vs. 9M04. Within this category, net trading income (€ 661 mn, -3.6% vs. 9M04) reflected lower revenues from the sale of derivative products, more than counterbalanced by commissions and other net income, which grew strongly (€ 524 mn, +22.1% YoY).
Operating costs totalled € 717 mn (+4.2% vs. 9M04). The increase was largely due to (a) the growing demand for outsourced services against development of Division companies' business and (b) the effects of renewal of the Italian collective labour contract for the banking industry.
The cost/income ratio was 29.9% (vs. 30.2% in September 2004).
Operating profit amounted to € 1,679 mn, growing by 5.4% vs. September 2004. Comparison of just the 3rd-quarter result in the two years shows an accelerated trend with a +23.5% increase vs. 3Q04, thanks to the significant increase of all components of total revenues (+17.3% in total) and a modest increase in costs (+4.7%).
Profit before tax amounted to € 1,302 mn as up to the end of September, up by 8% YoY, thanks to lower net write-downs of loans (€ 333 mn, -11.4%) - particularly high in the previous year due to the presence of some major exposures.
Net profit in 9M05 amounted to € 770 mn, with a 9.7% YoY increase.
As at the end of September 2005 the Corporate Division had 249 branches (+6 vs. December 2004) and 5,426 employees (-82 heads vs. 2004 year-end).

Private Banking & Asset Management

The Private Banking & Asset Management Division ended 9M05 with net profit of €308 mn, showing strong growth over 9M04 (+32.2%).
Operating profit amounted to € 421 mn, much higher than in 9M04 (+41.3%).
More specifically, total revenues rose to € 983 mn (+16.1% YoY) thanks to the growth of net interest income (+11.1% YoY) and to an increase of +19.0% YoY of net commissions. The total-revenue trend in 3Q05 over 3Q04 showed growth of 23.1%.
Revenues were positively affected by an increase in average total assets managed by Pioneer (+12.4% vs. September 2004), accompanied by an improvement in asset mix (with the equity component rising to 31.4% vs. 27.1% in September 2004) and by higher productivity of Xelion's financial advisors (per-head AUM up from € 5.2 mn in September 2004 to € 7.1 mn, +36.5%). A further positive impact came from improvement in the profitability of UPB (UniCredit Private Banking) thanks to the asset management component supported by the new managed discretionary accounts FocusInvest and Investment Program, which were not present in 3Q04.
Operating costs totalled € 562 mn, increasing slightly YoY (+2.4%YoY). More specifically, staff costs (€ 275 mn, +6.6% YoY) felt the effects of (a) renewal of the national collective labour contract for the Italian banking industry, (b) the increased incidence of highly qualified staff, (c) international development of the business, and (d) the incidence of the variable component of remuneration.
The decrease in other expenses and amortisation (€ 287 mn, approximately -1.4% YoY) was the result of efficiency enhancement undertaken during 2005, stemming from corporate rationalisation (ex-ING non-strategic vehicles and outsourcing of IT activities).
The cost/income ratio was 57.2%, improving substantially vs. 64.8% in 9M04.
The Private Banking & Asset Management Division managed or administered € 203.3 bn of financial assets  (+17.7% vs. December 2004, +6.9% in 3Q05).
The increase in total assets was also the result of net inflows since the beginning of the year in all the Division's business units.
In 9M05 Pioneer Investments reported total net inflow of € 7.9 bn vs. € 2.4 bn in 9M04, thus confirming an outstanding period of growth in the global asset management panorama. Market share of Italian funds was 15.30% in October 2005, growing by 76 bp vs. December 2004 and by 97 bp YoY.
Total assets managed by the company thus rose to € 154.2 bn vs. € 129.8 bn at the beginning of the year with an 18.8% increase (+6.1% net inflow effect, +9.4% performance effect, and 3.3% effect of AmSouth acquisition), whilst at the same time increasing profit margins versus the previous year, thanks to a better asset mix and strong product innovation.
Xelion's 9M05 featured strong growth of total assets (+11%), which progressed from € 12.1 bn at the end of December 2004 to € 14.1 bn.
A contributor to this growth was the net inflow achieved in the period of € 788 mn, equivalent to a 14% market share in the financial-advisor sales network sector.

New Europe Division

During 3Q05 the macroeconomic scenario of New Europe countries evolved in a substantially positive manner. Although showing some deceleration over the previous year, economic growth remains sound and sustainable.
Changes in the Division's main income statement and balance sheet figures are shown below based on constant exchange rates.
As up to the end of September 2005, the New Europe Division reported net profit of € 537 million, up by +18.3% YoY.
Total revenues amounted to € 1,551 mn, growing by 8.8% YoY. Net interest income (€ 922 mn) increased by 6.3% YoY, mainly thanks to a good loan volume trend in the Division's banks. Within lending, mortgages (€ 2.6 bn, +24.0% YoY) and consumer credit (€ 2.1 bn, +34.9% YoY) featured a buoyant growth trend.
The Division's customer loans amounted to € 17.1 bn, up by € 14.7% since the beginning of the year and by +4.2% vs. June 2005. Direct deposits rose to € 25.0 bn (+1.6% since January 2005 and +1.3% vs. June 2005).
Doubtful loans(5) decreased to € 682 mn (-19.7% vs. 2004 year-end, -12.7% vs. June 2005), whilst net non-performing loans amounted to € 275 mn (-17.9% vs. December 2004, -19.6% vs. June 2005). The numerous projects and actions undertaken to improve the entire lending process led to a considerable increase of the coverage ratio for both non-performing loans (88.6% vs. 85.2% in December 2004 and 85.6% in June 2005) and total doubtful loans (76.8% vs. 70.2% in December 2004 and 73.2% in June 2005). There was also clear improvement of the total doubtful loans/total customer loans ratio, which was 3.98% vs. 5.91% at the beginning of the year.
Net non-interest income (€ 629 mn) grew by 22.6% YoY, thus confirming the banks' effective commercial policy and development of sales of asset management products (mutual funds +52.9% YoY).
Operating costs (€ 822 mn) featured an increase of 6.0% vs. 9M04. This was partly due to alignment of expenses with the area's average inflation and in part to investments made to finance the growth of minor banks or those featuring a marginal presence.
In terms of efficiency, the cost/income ratio was 53.0%, showing improvement over 9M04 (54.3%).
Operating profit totalled € 729 mn, up by 12.3% vs. 9M04.
The favourable macroeconomic environment, together with a tightly managed loan issuance process (leading to clear improvement of loan write-downs, i.e. by 31.2% vs. 9M04) - partly counterbalanced by higher income taxes (mainly because of the tax benefits enjoyed by Pekao in 2004) - led to achievement of net profit in the period of € 537 mn, with growth of +18.3% YoY.
As at September 2005 the Division's employees totalled 28,875 (+626 heads vs. December 2004 - due to the presence of seasonal tourism employees in Croatia - and +50 heads vs. September 2004) whilst its branches totalled 1,313 (+26 vs. December 2004 and +27 vs. September 2004).

(1) With adoption of IAS/IFRS the area of 100% line-by-line consolidation has expanded with the entry of some companies previously recognised at equity and of two companies previously measured at cost. On September 28th Koçbank, 99.9%-owned by Koç Financial Services AS ("KFS"), the joint venture in Turkey between UniCredit and the Koç Group, completed acquisition of a 57.4% equity interest in Yapı ve Kredi Bankası AS. This investment has been recognised at equity.
(2) Tier 1 and Total Capital ratios are calculated according to Italian GAAPs.
(3) KFS has been considered at 50%. With KFS at 100%, total headcount would amount to 71,314 employees whilst branches would total 4,473.
(4) Inclusive of some € 4.3 bn coming from acquisition in the USA of the AmSouth funds, completed in September.
(5) Doubtful loans are calculated on the basis of current exchange rates.

Attached are the Group's reclassified balance sheet and income statement and the key figures of the Group and Divisions based on IAS/IFRS. Reconciliations with Italian GAAPs are also attached. It is pointed out that this documentation has not been certified by the independent auditor.

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