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Ad-hoc-Meldung/Ad hoc Release nach § 15 WpHG/pursuant to § 15 of the German Securities Trading Act: UniCredit: Excellent business results in 2005, year of the HVB Group deal

Ad-hoc-Meldung / Ad hoc Release
nach § 15 WpHG / pursuant to § 15 of the German Securities Trading Act:
UniCredito Italiano S.p.A.: Excellent business results in 2005, year of the HVB Group deal.

EXCELLENT BUSINESS RESULTS IN 2005 YEAR OF THE HVB GROUP DEAL
NET PROFIT €2,470 MILLION (1) (+19.4% YOY). PRO-FORMA NET PROFIT(2), ADJUSTED FOR BEFORE )TAX RESTRUCTURING CHARGES OF €580 MILLION, EQUAL TO €3,808 MN AND TO €0.37 PER SHARE(3).
PROPOSED DIVIDEND OF €0.22 PER ORDINARY SHARE, UP 7.3% YOY (€0.235 PER SAVINGS SHARE)

UniCredito Italiano's consolidated results at December 31st, 2005 calculated based on the international accounting standards (IAS/IFRS) adopted by the European Community, as per the Bank of Italy instructions included in Circular n. 262 dated December 22nd, 2005 and relative temporary statutes, have been approved. The 2004 results do not include application of IAS 32 and 39.

• Strong growth in the Group's portion of net profit: €2,470 million (mn)(1) at the end of 2005 (+19.4% YoY), €2,573 mn net HVB (+24.4% YoY)
• Pro-forma net profit, adjusted for before tax restructuring charges of €580 mn, equal to €3,808 mn and to €0.37 per share
• Outstanding operating results featuring revenue growth (total revenues of €11,024 mn, +8.0% YoY). Specifically:
Net interest income of €5,645 mn (+9.5% YoY)
Net commission income of €4,373 mn (+12.0% YoY)
Operating profit of €4,979 mn, (+10.6% YoY)
• Improvement of Cost/Income ratio to 54.8% (vs. 55.9% in December 2004)
• Continued customer lending growth (€160.5 billion (bn), +14.9% YoY,  excluding contribution of the HVB Group)
• Strong growth in Pioneer Investments' assets under management that rose to €158.6 bn (+22.1% YoY), Italian mutual fund market share strengthened reaching 15.57% at December 2005 (14.54% at December 2004)

Today the Board of Directors of UniCredit approved consolidated results at December 31st, 2005(4) prepared according to the international financial reporting and accounting standards (IAS/IFRS) adopted by the European Community, with application of IAS 32 and 39 (relative to financial instruments) as of January 1st, 2005.
The year 2005 ended for the Group with a net profit of €2,470(1) mm, an increase of 19.4% over the previous year.
Profit reflects the effects of the HVB deal. Specifically, it includes a contribution from HVB in the months of November and December(5) (including €4O3 mn of before tax restructuring charges) in addition to restructuring charges of €177 mn (once again before tax) posted to UniCredit. These charges are primarily attributable to the plan to reduce resources as part of the integration of the two Groups. The HVB Group contribution is posted under a single heading in UniCredit's income statement "HVB Group post-deal net profit". Each single P&L heading for the years 2005 and 2004 is substantially comparable. 
Pro-forma net profit(2), adjusted for before tax restructuring charges of €580 mn, amounted to €3,808 mn, equal to earnings per share of €0.37.
UniCredit Group's profit, excluding the HVB Group (profit for the two months and charges tied to the aggregation), is equal to €2,573 mn, an increase of 24.4% YoY. 4Q05, excluding HVB, reached €455 mn. 
The Group's total revenues reached €11,024 mn, an increase of 8.0% over the previous year (+6.5% net foreign exchange effect). This trend was underpinned by the positive performance of both net interest income and of net non-interest income.
Total net interest income, sustained by increased net interest (€5,394 mn, +10.6% YoY) reached €5,645 mn, an increase of 9.5% YoY (+7.8% YoY at constant exchange rates). The progress of net interest is explained by decided growth in volumes, only partially absorbed by the narrowing of the spread between loan and deposit rates caused, in particular, by the higher incidence of bonds on liabilities. 
Customer loans grew 14.9% YoY and by 5.4% in the quarter, reaching a total of €160.5 bn at the end of 2005, excluding the HVB Group's contribution, a level that exceeds the end of 2004 by more than €20 bn. 
Real estate loans contributed in particular to this increase. The latter, thanks also to historically low interest rates, sustained both growth in mortgages, in large part represented by demand for home loans, and leasing contracts.  Total mortgages and leasing, also considering non cancelled securitised contracts, showed an increase of 17.2% in the twelve month period. The increase in current accounts (+4.8% YoY), though more contained, was also significant, while other technical forms grew overall by 16% YoY.
Market share of the Group's business units operating in the Italian lending market was 10.59% (10.94%, +11 bp vs. December 2004 excluding approx. 4.7 bn of securitisations). Market share in the medium-/long term segment was 10.81% (11.13% excl. securitisations, +8 bp vs. December 2004).
In reference to credit quality, in 2005 the Bank of Italy defined a new aggregate of deteriorated loans that includes, in addition to non-performing, watchlist and restructured loans, those loans that have expired by over 180 days and that were previously classified as performing loans. In 1H05 the Bank of Italy also introduced new rules for the classification of restructured loans that must now include all new lines of credit issued to parties in possession of previously restructured lines. For this reason comparison between the two years is limited to non-performing loans and watchlist. Non-performing loans and watchlist totalled €3,999 mn (vs. €3,775 mn at the beginning of 2005) with an incidence on total loans down from the 2.70% at the beginning of the year to 2.49% in December 2005. Restructured loans equalled €419 mn (€210 mn at the beginning of 2005), expired contracts reached €857 mn. Deteriorated loans totalled, therefore, €5,275 mn, with an incidence of 3.29% on total loans.

Direct deposits amounted to €178.1 bn, €23 billion higher (+14.9% YoY) than the previous year. This increase is explained by the trend of both debt securities in issue (+16.6% since the beginning of the year), and in particular bonds (+28% YoY), and of the amounts due to customers - i.e. customer accounts (+9.3% (6)since the beginning of the year), that following IAS adoption no longer the more volatile part of repurchase agreements (repos) now reclassified among trading liabilities.
Customer assets managed by the Group (including liquid assets, securities issued by Group companies and funds supporting structured bonds), reached €157 bn at the end of 2005, with an increase of 3.1% in the quarter and of 22.6% since the beginning of the year. This marked increase is attributable to several factors: (a) the positive trend in net inflows (Pioneer Investments net inflows reached €9.8 bn vs. €3.5 bn in the previous year), (b) the favourable market trend, and (c) the acquisition of US investment funds (with assets of approximately USD 5.5 bn).
Net non interest income amounted to €5,379 mn, up 6.6% YoY.

This entry includes net commissions that equalled €4,373 mn at the end of December, an increase of 12.0% vs. 2004 (+10.6% at constant exchange rates). The increase in commissions was driven by both wealth management and securitiesin custody fees (€2,338 mn), that reported growth of 14.6% YoY, and by commissions for other activities (+9.2% YoY).
All of the main areas of asset management and administration reported significant growth over the previous year. Growth of the commissions for securities dealing and placement (€213 mn, +23.1% YoY) is primarily attributable to Group investment bank placement activities, the success of managed discretional accounts (199 mn, +50.8% YoY) is tied to the highly customisable lines (Focus Invest) launched in 2004, the increase in  fees for mutual funds (1,462 mn, +15.3% YoY) is explained by both growth in inflow and asset volumes and the increased incidence of equity funds, while growth in insurance products (382 mn, +12.4%) is tied to a recovery in sales, following the drop reported in 2004. In the other areas of activity there was an increase, in particular, of 6.7% in fees from current accounts, loans and guarantees, in part offset by the inclusion of income in amortised cost calculation, thanks to results obtained by UBM in loan origination arrangements and syndication.
The excellent results in asset management and administration, assisted by positive stock market trends, is connected to continuous development of indirect customer deposits that at the end of 2005 reached a market value of €296.9 bn, excluding the HVB Group, with an increase of 17.5% vs. December 2004 and of  3.9% vs. the last quarter. Within this segment, the administered asset component amounted to €142.3 at the end of December (+10.9% vs. the end of 2004). Indirect deposits, net any possible duplications of other forms of customer inflows (such as liquid assets, securities issued by Group companies and funds supporting structured bonds), totalled €154.6 bn at the end of 2005 with an increase of 23.7% in the twelve month period, realised in part via external lines. 
Net trading, hedging and fair value income, equal to €842 mn, reported a drop of €136 mn compared to the previous year (-13.9%), primarily due to the different accounting methods used in fair value valuation of a call option issued on Assicurazioni Generali stock and to the shares held in Assicurazioni Generali classified among available-for-sale (AFS) assets. The significant increase in the price of the stock referred to in the course of the year resulted in a negative change in the call option's fair vale of approximately €114 mn, that impacted the income statement for the year, while the revaluation of the equity investment (equal to €203 mn in the twelve month period) is temporarily booked to shareholders' equity until realisation. The total gain realised on Generali stock at December 31st equalled €330 mn. The reduction in net trading, hedging and fair value income is also explained by the drop in sales of derivatives to corporate customers and, to a lesser degree, lower bond-restructuring revenues in the retail segment. Revenues from the sale and trading of derivatives to institutional customers increased.
Other net income amounted to €164 mn, unchanged vs. the previous year.
Operating costs, which totalled €6,045 mn, increased vs. 2004 by 6.0%. This increase is more contained (+2.3% YoY), if adjusted for foreign exchange effect and if the change in consolidation perimeter is taken into consideration (primarily Yapi) along with the costs related to productivity bonuses (VAP). The latter, that equalled approximately €30 mn, were allocated in 2005 and will be paid in cash in 2006, rather than with shares as in the previous year. Furthermore, as part of the Group's reorganisation, a one-off amount of approximately €10 mn was destined to personnel and the Group Assistance Fund (UniCa). Operating costs include staff costs (€3,720 mn) that show an adjusted increase of 3.3% YoY primarily attributable to higher costs relating to the reward system and the renewal of in 2005 of the collective labour contract.
The adjusted increase in other administrative expenses, net recovery of costs, of 1.8%, is in large part attributable to advertising, maintenance and instalments for plant and equipment and rental costs.
The cost/income ratio at the end of 2005 thus drops to 54.8% from 55.9% in the previous year.

The Group's operating profit amounted to €4,979 mn, with an increase of 10.6% vs. the previous year. 
The positive operating profit performance was enhanced by the growth of net income from investments which benefited in particular from a capital gain of approximately €200 on sale of the equity interest in "Serenissima" motorway (Autostrada Brescia-Verona-Vicenza-Padova S.p.A.). Net income from investments totalled €330 mn at the end of 2005, vs. €127 mn in the previous year.
Provisions for risks and charges amounted to €154 mn at the end of December, vs. €265 mn in 2004. The provision is primarily attributable to the Retail and Corporate Divisions, in light of rescission actions and other litigation underway.
Restructuring charges connected to the HVB deal posted in 2005 by companies that entered the Group's perimeter of consolidation prior to the deal totalled €177 mn.
Net write-downs of loans and provisions for guarantees and commitments totalled €910 mn, vs. €888 mn in the previous year (+2.5%). The loan stock/net write-down ratio was down vs. 2004 (from 0.64% to 0.57%).
2005 profit before tax, therefore, at the end of December, equalled €4.068 mn, with an increase of 25.6% over the previous year.
Income tax for the period, equivalent to €1,396 mn, registered an increase of 39.7% vs. 2004, with an incidence on profit before tax of 34.3%, an increase vs. the 30.9% in 2004.
HVB's income statement contributed to UniCredit's consolidated result as of November 1st, 2005. The HVB Group's net profit in November and December, before minority interests, equalled €59 mn, almost all of which is attributed to the same minority interests. This figure was impacted by restructuring charges of €322 mn net tax (€403 mn before tax) tied to the aggregation with the UniCredit Group.
Profit after tax amounted, therefore, to €2,731 mn, an increase of 22% vs. 2004.
Minority interests' profit equalled, at the end of December, €261 mn, an increase of €91 compared to the end of 2004, attributable to both the increase in the Pekao Group's proft and the increased minority stake in HVB.
The Group portion of net profit amounted, therefore, to €2,470 mn, an increase of 19.4% vs. €2,069 mn in the same period of the previous year.
ROE, in light of an average annual increase in shareholders' equity of 20.9%, equalled 15.6%, in line with the previous year. Net the HVB transaction, and the impact on equity, ROE reached 19.0% (+3.3 pp YoY).

Core Tier 1(7) was 5.52% at the end of December 2005, and the Total Capital Ratio(7) reached 10.33%.




Approval of Shareholders' Agreements regarding Bank Austria's role in the UniCredit Group

The Board of Directors today, in closing, also approved shareholders' agreements concerning Bank Austria Creditanstalt AG, the contents of which were announced by UniCredit in a press release last March 14th. These agreements - reached between UniCredit, HVB, Privatstiftung zur Verwaltung ("AVZ", the City of Vienna's Foundation), BR-Funds (the fund of BA-CA employees) and BA-CA - will regulate the role of the Austrian bank within the UniCredit banking group.


Milan, March 22, 2006


Notes:
(1)The Group's portion of net profit, equal to €2,470 mn, includes the HVB Group's net income for the months of November and December 2005 (following  formalisation of the public exchange offer involving HVB shares).
(2)The Group's portion of 2005 pro-forma net profit includes the HVB Group's results as of January 1st, 2005.
(3 )The adjusted pro-forma net profit per share of 0.37 is calculated based on n. 10,303.6 mn shares at the end of 2005.
(4)The Yapi Kredi Bankasi Group, proportionately consolidated as of the end of September, is 57% controlled by Koç Financial Services A.S., a joint-venture in Turkey between UniCredit and the Koç Finansal Hizmetler Group.
(5)Initial consolidation of the HVB Group took place on November 1st, as per accounting principle IFRS 3 - business combinations.
(6) Net of the notional funding of securitizations recognized in the accounts
(7) Including HVB



These assessments are subject to the following disclaimer:

Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. UniCredito Italiano S.p.A. assumes no obligation to update any information contained herein.
.
Enquiries:

Investor Relations: Tel. 02/88628715; e-mail: UCI-InvestorRelations@unicredit.it
Media Relations: Tel. 02/88628236; e-mail: Uci.Ufficiostampa@unicredit.it

Milan, March 22 2005
UniCredito Italiano S.p.A.
Via San Protaso 1/3
20121 Milano
Italien

Securities listed on German regulated markets:
ISIN IT0000064854
WKN: 850832
Listed: Official Market (Amtlicher Markt), Frankfurt Stock Exchange (General Standard)