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UniCredit Group's consolidated results for third quarter 2007 approved

Ad-hoc-Meldung / Ad hoc Release
nach § 15 WpHG / pursuant to § 15 of the German Securities Trading Act

UNICREDIT GROUP'S CONSOLIDATED RESULTS FOR THIRD QUARTER 2007 APPROVED: NET PROFIT €1.1 BILLION, +19% YoY ON A LIKE-FOR-LIKE BASIS
THE SUCCESSFUL INTEGRATION WITH CAPITALIA CONTINUES
THE MERGER OF CAPITALIA IN UNICREDIT EFFECTIVE AS FROM OCTOBER 1ST, 2007
THE NEW GROUP'S CONSOLIDATED PRO-FORMA NET PROFIT FOR THE FIRST NINE MONTHS OF 2007: €5.3 BILLION


UNICREDIT GROUP (excluding Capitalia Group):

  • Group's portion of net profit €1,122 million, an increase of 19.0% YoY on a like-for-like basis (1) . Net profit for the first nine months 2007 at €4,729 million (+26.8% YoY on a like-for-like basis (2))
  • EVA (3) of approximately €2.5 billion generated in the first nine months of 2007
  • Operating profit €2,411 million (+1.1% YoY) thanks to the solid performance of the commercial banks: CEE area +24.8% YoY, Retail +26.2% YoY, Private Banking +50.0% YoY, and Corporate + 10.0% YoY
  • Markets & Investment Banking Division's profit before tax €123 million (-€215 million YoY) negatively impacted by the "mark to market" valuation of structured credits, but offset by the positive contribution of all the other business divisions
  • Operating costs €3,281 million, an increase of 1.1%, below the rate of inflation; cost/income ratio stable YoY at 57.6%
  • Core Tier 1 5.98%, an improvement of 16 bp over year-end 2006
  • Asset quality improves:

    • Net impaired loans down by approximately €900 million on June 2007 (-7.4%)
    • Coverage ratio of net impaired loans improved (54.4% at September 2007, +1.2 pp in the quarter)


CAPITALIA GROUP (BASED ON UNICREDIT'S RECLASSIFICATION METHOD (4)):

  • Operating income €1,178 million, an increase of 3.4% YoY thanks to good interest income (€746 million, +14.8% YoY)
  • Operating profit €402 million ( +1.0% YoY), €1,440 million in the first nine months of 2007, an increase of 15.9% YoY
  • Group's portion of net profit €82 million (-66% YoY), impacted by integration costs of €67 million
  • Net doubtful loans (5)/net loans 4.2% at September 2007, an improvement of 33 bp over year-end 2006



KEY UNICREDIT GROUP AND CAPITALIA GROUP PR0-FORMA (6) FIGURES FOR THE FIRST NINE MONTHS OF 2007

  • Operating income €22,494 million
  • Operating costs €12,125 million
  • Operating profit €10,369 million
  • Integration costs €204 million
  • Profit before tax €8,560 million
  • Group's portion of net profit €5,334 million
  • Core Tier 1 6.03%



UNICREDIT GROUP

UniCredito Italiano's (UniCredit) Board of Directors approved consolidated results for third quarter 2007 (7) which show a net profit of €1,122 million (mn), down from the €1,462 mn reported in September 2006, due to various non-recurring items (the sale of 2S Banca in 3Q06 and the impact of German tax reform in 3Q07). On a like-for-like basis (like-fore-like foreign exchange and perimeter basis and net the extraordinary items) growth reached 19.0% YoY.

The Group's net profit as of the beginning of the year reached €4,729 mn, an increase of 3.8% YoY. ROE (8) in the first nine months of 2007 came in at 17.5% (compared to 18.4% in the first nine months of 2006). EVA generated in the first nine months amounted to approximately €2.5 billion (bn), +29,3% YoY.

The excellent performances of the Retail (+26.2% YoY), Corporate (+10% YoY) and Private Banking Divisions (+50% YoY) , as well as Poland's Markets (+24.9% a/a) and the CEE Division (+24.6% YoY) contributed to the operating profit for the quarter (€2,411 mn, +1.1% YoY; +0.2% YoY on a like-for-like foreign exchange and perimeter basis) and more than compensated for the drop in the MIB Markets & Investment Banking Division's results which were penalized by the turbulent loan market and the weak financial markets.

The Group's operating income reached €5,692 mn, +1.1% YoY (+0.2% YoY on a like-for-like foreign exchange and perimeter basis), generated thanks to good growth in net interest income (€3,403 mn, +8.0% YoY, +7.1% on a like-for-like foreign exchange and perimeter basis), which offset the decrease in net non-interest income (€2,289 mn, -7.6% YoY, -8.6% on a like-for-like foreign exchange and perimeter basis).

Net interest forming part of net interest income grew by 8.3% YoY (+7.1% on a like-for-like foreign exchange and perimeter basis) to €3,251 mn thanks primarily to the volumes of loans intermediated and the trend in market rates which had a positive impact on deposit spreads and profitability.

Net customer loans for the Group at September 2007 totaled €461 bn (+4.4% over December 2006, +7.2% YoY).

The growth in the third quarter (+1.4%) was sustained by the impressive performances of the CEE (CEE: +7.2% and Poland's Markets: +2.5%, both compared to June 2007) and Corporate (+2.5%) Divisions as well as the positive dynamic recorded by all the other divisions. The solid trend in the financial leasing (+29% since the beginning of the year) and consumer financing (+7% in the first nine months of 2007) sectors was also confirmed.

Customer deposits, excluding securities amounted to more than €313 bn, an increase of +8.6% since the beginning of the year (Corporate +17%, Retail +8%) and +3% for the quarter (Corporate +10%, Private Banking +11%). When compared to the previous year, the overall increase for the Group reaches more than 12%. 

Net commissions rose 9.4% YoY (+8.9% YoY on a like-for-like foreign exchange and perimeter basis) to €2,134 mn in the quarter, which also confirmed the positive trend for the first nine months (+8.9% YoY), thanks to the contribution made by all the divisions, in particular MIB (+22% YoY), Poland's Markets (+19% YoY) and CEE (+26% YoY).

In the third quarter the most dynamic components in this category were management and segregated account services (+15%, in particular insurance products, +24%), along with forex dealing and foreign transaction services (+24%). In the nine month period the solid performance of segregated accounts (+25%) and the above mentioned insurance products (+20%) continued. Overall commissions from asset management rose 2.7% YoY over the previous year benefiting from an increase in volumes generating recurring fees, and 7.2% in the first nine months of the year.

At the end of September 2007, volumes of the assets managed by the Group's asset management companies reached €243.1 bn (+1.4% vs. September 2006). Since the beginning of the year, however, a loss of 1.2% was reported due to the negative market scenario which resulted in diminished assets and client redemptions.

Net trading, hedging and fair value income for the quarter is negative at -€11 mn due to the US sub-prime mortgage crisis; while the Group's exposure to these assets is marginal, the increased cost of funding, the widening of spreads and the lack of liquidity had a negative impact on "Structured Credit". The fair value valuation of the Generali option also had a negative impact of €13.5 mn on the quarterly results (in third quarter 2006 there had been a positive impact of €1.3 mn), while there was a positive impact in the first nine months of €4.3 mn (in the first nine months of 2006 there had been a negative impact of €14.1 mn).

Other net income in the quarter totaled €166 mn, an increase of €70 mn YoY.

Operating costs in the quarter came in at €3,281 mn (+1.1% YoY, +0.2% YoY on a like-for-like foreign exchange and perimeter basis). This item includes a decrease in staff costs (-1.1.% YoY) attributable to a reduction in the variable components linked to business results (particularly with regard to the MIB Division) and the steps taken to enhance efficiency and rationalization implemented by the entire Group.

Other administrative costs (€1,155 mn) grew by 5.5% YoY (+3.6% on a like-for-like foreign exchange and perimeter basis) due to the marked expansion of the CEE Division (particularly in Poland, Russia and Hungary) and an increase in ICT expenses in Germany.

Amortisation, depreciation and impairment losses on intangible and tangible assets (€289 mn) are unchanged YoY (-1.1% on a like-for-like foreign exchange and perimeter basis).

The cost/income ratio came in at 57.6% for the quarter, while in the nine month period it improved from 55.8% at September 2006 to 52.5% at September 2007, testimony to the Group's effective and balanced growth.

The provisions for risks and charges (€38 mn vs. €56 mn in third quarter 2006) dropped by 32.1% YoY, integration costs amounted to €35 mn compared to €52 mn in third quarter 2006.

As regards to the trend in asset quality at September 30th, 2007, there was a significant reduction in net impaired loans which fell from €14,276 mn at December 2006 to €11,430 mn at September 2007 (approximately -20%), thanks in particular to the net reduction in restructured loans of almost two thirds. The total impaired loans/net customer loans ratio also fell from 3.23% at December 2006 to 2.48% at September 2007).

The coverage ratio of total impaired loans improved by more than five percentage points reaching 54.4% at September 2007 (compared to 48.9% at December 2006) and in terms of net non performing loans the ratio rose from 61.5% at year-end 2006 to 64.1%, testimony to the validity of the policies to improve risk control and coverage implemented by the Group. Overall asset quality was not impacted significantly by the negative scenario.

Net income from investments amounted to €73 mn compared to €450 mn in the same period of the previous year which benefited from an extraordinary item in 3Q06 of €401 mn related to the sale of 2S Banca.

Income tax for the period was 38.5% higher YoY at €612 mn translating to a tax rate of 32.1%, an increase over the 21.4% in 3Q06 due to an extraordinary tax charge in 3Q07 of €140 mn attributable to the effect on deferred taxes of the reduced tax rate in Germany effective as of 2008.

Net profit, therefore, came to €1,295 mn (-20% YoY).

Minorities at the end of September 2007 were basically unchanged over the same period in 2006 (€173 mn compared to €174 mn).

Net profit attributable to the Group totaled, therefore, €1,122 mn vs. €1,462 in 3Q06.

The Group's portion of net equity amounted to €40,847 mn (€ 38,468 mn at the end of December 2006).

Core Tier 1 rose to 5.98%, an improvement of 16 pb on year-end 2006 (5.82%) thanks to internally generated financing which more than compensated for the increase in risk weighted assets. Total Capital Ratio reached 10.24% compared to 10.50% at year-end 2006.


At the end of September 2007, the Group's organisation consisted of a staff (9) of 137,324 Full Time Equivalents (+127 heads when compared to year-end 2006). This total is the result of a combination of different factors: on the one hand, the reduction in personnel (approximately 3,000 heads) due to the outsourcing of certain operations, the exit of companies from the Group (-1,585 heads), as well as efficiencies in the Corporate Centres, in the GBS, in the CEE countries (excluding Russia and Turkey) and in the Retail business (-1,412 heads); and on the other hand, an increase in resources due to the inclusion of new companies in the perimeter of consolidation (+625 heads) along with growth initiatives (+2,274 heads) primarily in Russia and Turkey (+1.612 heads), Retail Italy (+259 heads) and in Corporate (+405 heads).


The Group's network consists of 7,529 branches (10) (+172 on December 2006).



CAPITALIA GROUP (BASED ON UNICREDIT'S RECLASSIFICATION METHODOLOGY (11)):

UniCredito Italiano's (UniCredit) Board of Directors also approved the Capitalia Group's consolidated results for third quarter 2007 which show operating income up by 3.4% YoY at €1,178 mn attributable to strong growth in net interest which rose significantly over third quarter 2006 (+15.6%) to €742 million thanks also to the decided increase in volumes intermediated with customers. Customer loans, in particular, confirmed the growth trend rising by 13.4% YoY, while direct deposits increased by 10.5% YoY.

With regard to the other components of operating income, commissions totaled to €398 mn (-2.0%), while net trading, hedging and fair value income reached €39 mn compared to €75 mn in third quarter 2006.

Operating costs amounted to €776 mn (+4.7% YoY); more in detail: staff costs were €507 mn (+2.2% YoY); other administrative costs rose 8.3% YoY to €288 mn; amortisation, depreciation and impairment losses on intangible and tangible assets (€56 mn) grew by 12%, while refunded expenses were positive at €75 mn and compared to €71 mn in third quarter 2006.

Operating profit, therefore, reached €402 mn, an increase of 1.0% YoY. In the first nine months 2007, operating profit is €1,440 mn, an increase of approx. 16% YoY.

Provisions for risks and charges rose from €15 mn in third quarter 2006 to €45 mn while net write-downs of loans and provisions for guarantees and commitments rose from €51 mn to €112 mn. As regards the trend in asset quality, the ratio of classified loans to customer loans fell by 0.5 pp YoY.

Profit before tax, after €67 mn in integration costs and €10 mn in net income from investments, totaled €188 mn (€415 mn in the same period last year).

After deducting income tax of €105 mn and minorities of €1 mn, the Group's portion of net profit equals €82 mn (€241 mn in third quarter 2006). In the first nine months of the year the net profit is €613 mn compared to €804 mn of the same period last year.


UniCredit also announces that Bank Austria Creditanstalt AG ("BA-CA"), responsible within the UniCredit Group for commercial banking activities in CEE, has finalized the acquisition of 91.8% of the total issued share capital of JSC ATF Bank ("ATF" or the "Bank") for a consideration of approximately US$2,117 million (approximately €1,452 million at current exchange rates). In particular, BA-CA acquired 95.6% of total issued ordinary shares for a consideration of US$1,661 million and 85% of total issued preference shares for a consideration of US$456 million. As announced on 21 June 2007, under the terms of the agreement signed by BA-CA and some private shareholders of ATF, the consideration will be increased by the relevant portion of a further payment to be calculated based on 50% of ATF's 2007 consolidated net profit, adjusted to take into consideration any accounting discrepancies shown in the 2007 audited consolidated financial statements (compared to previous years consolidated audited financial statement).

Additionally, pursuant to the Kazakh Law on joint stock companies, on 17 November 2007 BA-CA will launch a mandatory tender offer for the Bank's remaining shares not already held at a price of KZT 10,180.93 (equivalent to US$84.37) for each ordinary share and KZT 5,675.11 (equivalent to US$47.03) for each preference share, representing, in each case, the price per share agreed by BA-CA with the majority shareholders of ATF. The offer will remain open for 30 days and minority shareholders will have the opportunity to tender their ordinary and/or preference shares until 17 December 2007. Shareholders tendering their shares in the course of the mandatory tender offer will also have a right to receive their relevant portion of a further payment as described above.



Notes:

1) On a like-for-like foreign exchange and perimeter basis and excluding the net capital gains from 2S Banca (€401 mn in 3Q06) and the impact of German tax reform (€-140 mn in 3Q07).
2) On a like-for-like foreign exchange and perimeter basis, excludes the net capital gains from Splitska (€332 mn in 2Q06), and 2S Banca (€401 mn in 3Q06) and Indexchange (€133 mn in 1Q07) and the impact of German tax reform (€-140 mn in 3Q07).
3) EVA: Economic Value Added, equal to the difference between NOPAT (net operating profit after taxes) and the cost of capital.
4) Attached is the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology.
5) Net NPLs and watchlisted loans
6) The combined pro-forma income statement at September 30th, 2007 was prepared for purely illustrative purposes and is not to be construed, therefore, as representative of the Unicredit Group's current or future economic situation. The new Group was formed on October 1st, 2007 subsequent to the effective merger of Capitalia in UniCredit.
7) Since the close of FY 2006, the most significant changes in the scope of consolidation are linked to the HVB Group, with the entry of 3 subsidiaries in the Retail Division (including Planethome AG) and one company from the Private Banking Division in the first half, as well as 3 companies of the Aton Group purchased by BA-CA in the month of July. Indexchange and HVB Payments & Services GmbH, sold by HVB in the first half, exited the scope of consolidation, as did LocatRent, sold by Locat at the end of August. Further significant changes in the scope of consolidation in 2006 involved the sale of Splitska Banka, Uniriscossioni, 2S Banca and Banque Monégasque de Gestion. Please note that the 2006 income statements were restated following completion of the "Purchase Price Allocation", presented with the 2006 financial statements, related to the HVB Group integration. 
8) Calculated on the basis of the average shareholders' equity for the period (excluding dividends to be distributed, reserves for AfS assets and hedge cash flows) 
9) "Full time equivalent", calculated according to a new methodology which does not include unpaid leaves. In the figures reported the KFS Group, proportionately consolidated, is included at 100%.  
10) In the figures indicated the KFS Group, proportionately consolidated, is included at 100%.
11) Attached is the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology.



Today UniCredito Italiano's (UniCredit) Board of Directors also approved the Capitalia Group's consolidated results for third quarter 2007 which show operating income up by 3.4% YoY at €1,178 mn attributable to strong growth in net interest which rose significantly over third quarter 2006 (+15.6%) to €742 million thanks also to the decided increase in volumes intermediated with customers. Customer loans, in particular, confirmed the growth trend rising by 13.4% YoY, while direct deposits increased by 10.5% YoY.
With regard to the other components of operating income, commissions totaled to €398 mn (-2.0%), while net trading, hedging and fair value income reached  €39 mn compared to €75 mn in third quarter 2006.

Operating costs amounted to €776 mn (+4.7% YoY); more in detail: staff costs were €507 mn (+2.2% YoY); other administrative costs rose 8.3% YoY to €288 mn; amortisation, depreciation and impairment losses on intangible and tangible assets (€56 mn) grew by 12%, while refunded expenses were positive at €75 mn and compared to €71 mn in third quarter 2006.

Operating profit, therefore, reached €402 mn, an increase of 1.0% YoY. In the first nine months 2007, operating profit is €1,440 mn, an increase of approx. 16% YoY.

Provisions for risks and charges rose from €15 mn in third quarter 2006 to €45 mn while net write-downs of loans and provisions for guarantees and commitments rose from €51 mn to €112 mn. As regards the trend in asset quality, the ratio of classified loans to customer loans fell by 0.5 pp YoY.
Profit before tax, after €67 mn in integration costs and €10 mn in net income from investments, totaled €188 mn (€415 mn in the same period last year).
After deducting income tax of €105 mn and minorities of €1 mn, the Group's portion of net profit equals €82 mn (€241 mn in third quarter 2006). In the first nine months of the year the net profit is €613 mn compared to €804 mn of the same period last year.


UniCredit also announces that Bank Austria Creditanstalt AG ("BA-CA"), responsible within the UniCredit Group for commercial banking activities in CEE, has finalized the acquisition of 91.8% of the total issued share capital of JSC ATF Bank ("ATF" or the "Bank") for a consideration of approximately US$2,117 million (approximately €1,452 million at current exchange rates). In particular, BA-CA acquired 95.6% of total issued ordinary shares for a consideration of US$1,661 million and 85% of total issued preference shares for a consideration of US$456 million. As announced on 21 June 2007, under the terms of the agreement signed by BA-CA and some private shareholders of ATF, the consideration will be increased by the relevant portion of a further payment to be calculated based on 50% of ATF's 2007 consolidated net profit, adjusted to take into consideration any accounting discrepancies shown in the 2007 audited consolidated financial statements (compared to previous years consolidated audited financial statement).

Additionally, pursuant to the Kazakh Law on joint stock companies, on 17 November 2007 BA-CA will launch a mandatory tender offer for the Bank's remaining shares not already held at a price of KZT 10,180.93 (equivalent to US$84.37) for each ordinary share and KZT 5,675.11 (equivalent to US$47.03) for each preference share, representing, in each case, the price per share agreed by BA-CA with the majority shareholders of ATF. The offer will remain open for 30 days and minority shareholders will have the opportunity to tender their ordinary and/or preference shares until 17 December 2007. Shareholders tendering their shares in the course of the mandatory tender offer will also have a right to receive their relevant portion of a further payment as described above.


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.




Notes:

1) On a like-for-like foreign exchange and perimeter basis and excluding the net capital gains from 2S Banca (€401 mn in 3Q06) and the impact of German tax reform (€-140 mn in 3Q07).
2) On a like-for-like foreign exchange and perimeter basis, excludes the net capital gains from Splitska (€332 mn in 2Q06), and 2S Banca (€401 mn in 3Q06) and Indexchange (€133 mn in 1Q07) and the impact of German tax reform (€-140 mn in 3Q07).
3) EVA: Economic Value Added, equal to the difference between NOPAT (net operating profit after taxes) and the cost of capital.
4) Attached is the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology.
5) Net NPLs and watchlisted loans
6) The combined pro-forma income statement at September 30th, 2007 was prepared for purely illustrative purposes and is not to be construed, therefore, as representative of the Unicredit Group's current or future economic situation. The new Group was formed on October 1st, 2007 subsequent to the effective merger of Capitalia in UniCredit.
7) Since the close of FY 2006, the most significant changes in the scope of consolidation are linked to the HVB Group, with the entry of 3 subsidiaries in the Retail Division (including Planethome AG) and one company from the Private Banking Division in the first half, as well as 3 companies of the Aton Group purchased by BA-CA in the month of July. Indexchange and HVB Payments & Services GmbH, sold by HVB in the first half, exited the scope of consolidation, as did LocatRent, sold by Locat at the end of August. Further significant changes in the scope of consolidation in 2006 involved the sale of Splitska Banka, Uniriscossioni, 2S Banca and Banque Monégasque de Gestion. Please note that the 2006 income statements were restated following completion of the "Purchase Price Allocation", presented with the 2006 financial statements, related to the HVB Group integration. 
8) Calculated on the basis of the average shareholders' equity for the period (excluding dividends to be distributed, reserves for AfS assets and hedge cash flows) 
9) "Full time equivalent", calculated according to a new methodology which does not include unpaid leaves. In the figures reported the KFS Group, proportionately consolidated, is included at 100%.  
10) In the figures indicated the KFS Group, proportionately consolidated, is included at 100%.
11) Attached is the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology.



Attached are the Group's key figures, the Group's reclassified balance sheets and income statements and the main Divisional results, Capitalia's income statements, the pro-forma income statement of the new UniCredit Group (including Capitalia) of the first nine months 2007 and the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology. All the above mentioned data are not subject to certification by the Independent Auditors.



Milan, November 14th, 2007
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)



Investor Relations:
Tel. +39-02-88628715; e-mail: investorrelations@unicreditgroup.eu
Media Relations:
Tel. +39-02-88628236; e-mail: mediarelations@unicreditgroup.eu




Attached are the Group's key figures, the Group's reclassified balance sheets and income statements and the main Divisional results, Capitalia's income statements, the pro-forma income statement of the new UniCredit Group (including Capitalia) of the first nine months 2007 and the reconciliation of Capitalia's economic data reclassified based on Capitalia's methodology and UniCredit's methodology. All the above mentioned data are not subject to certification by the Independent Auditors.



Milan, November 14th, 2007

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)



Investor Relations:
Tel. +39-02-88628715; e-mail: investorrelations@unicreditgroup.eu
Media Relations:
Tel. +39-02-88628236; e-mail: mediarelations@unicreditgroup.eu