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UniCredit: Strong First Quarter 2017. Transform 2019 on track - 1Q17 Group Results







Resilient Recurring Revenues Thanks to Improved Business Performance. NII Stabilizing at 2.6 bn. Fees Increased by 4.5 per cent Y/Y at 1.5 bn in 1Q17

 Operating Costs Down by 3 per cent Y/Y at 2.9 bn Thanks to Transform 2019 Actions

LLP down by 11.8 per cent Y/Y at 670 m. Cost of Risk at 60 bp

Non Core NPEs Down by 1.8 per cent Q/Q Confirming Positive Asset Quality Trend

Net Result at 907 m with Gross Operating Profit Up by 14.6 per cent Y/Y. Net operating Profit Up by 36.1 per cent Y/Y

 Solid CET1 Ratio Fully Loaded at 11.45 per cent, Above 12 per cent Pro Forma Including Pioneer and Bank Pekao Disposals

Transform 2019 Already Starting to Deliver Tangible Results



UniCredit Group 
1Q17 Highlights [1] Reported revenues at €4.8 bn (+11.7 per cent Q/Q, +3.4 per cent Y/Y). Resilient recurring revenues underpinned by solid NII and strong fees generation. Trading profit benefitting from large client driven transactions 
Strong focus on operating expenses at €2.9 bn (-1.5 per cent Q/Q, -3.0 per cent Y/Y) and reduced Cost/Income ratio at 59.7 per cent from 63.7 per cent in 1Q16
Lower LLP at €670 m (-54.9 per cent Q/Q, -11.8 per cent Y/Y) confirming cost of risk guidance of 65bp in 2017
Reported net profit of €907 m  with all divisions improving Q/Q and Y/Y
Stated RoTE at 9.4 per cent. Adjusted RoTE at 7.0 per cent[2]
Capital Fully loaded CET1 ratio at 11.45 per cent, above 12 per cent pro forma for Pioneer and Bank Pekao disposals
Asset Quality Lower risk profile, with Gross NPE further reduced to €55.3 bn in 1Q17, down by ca. 30 per cent Y/Y with NPE ratio of 11.4 per cent, thanks to  disposals and lower inflows from performing 
NPE coverage ratio improved to 56.3 per cent from 55.6 per cent in 4Q16
Transform 2019 Update Continuous balance sheet de-risking with operational plan on NPE approved and consistent with both Transform 2019 and ECB guidelines 
Cost cutting initiatives are progressing (achieved 36 per cent of branch closures planned and 32 per cent of fte reduction)
Italian commercial banking network streamlined and strategic partnerships signed
Lower weight of group corporate center on Group total costs

Milan, 11 May 2017: yesterday, the Board of Directors of UniCredit S.p.A approved 1Q17 results. After the Board of Directors, Jean Pierre Mustier, Chief Executive Officer, UniCredit S.p.A. commented:


"UniCredit had an encouraging  first quarter with all core business lines contributing positively to the Group.  Revenues came to 4.8 billion, an increase of almost 12 per cent in the quarter and 3 per cent year on year.  Net profit at 907 million rose significantly, up 40 per cent versus the same period last year.  These results underpin UniCredit's strengths as a simple pan-European commercial bank with a fully plugged in CIB. They also illustrate that the One Bank One UniCredit concept and the implementation of Transform 2019 are already actively contributing to our performance. Our strong focus on costs continued, down 1.5 per cent quarter on quarter and 3 per cent year on year. Asset quality further improved with lower loan loss provisions, higher NPE coverage  and a drop in cost of risk to 60 basis points. We also confirm our 2017 NII objective of 10.2 billion and an end of year fully loaded CET1 ratio above 12 per cent. We are already seeing early but tangible results of our Transform 2019 plan and I am proud of everyone in the Group for focusing on executing and delivering on the plan."







Transform 2019 implementation is up and running. In 1Q17 the Group has already made progress in achieving its targets:


 -  Strengthen and optimize capital: €13 bn rights issue was successfully completed on March 2. This was a major step in strengthening and optimizing UniCredit's capital position.
Fully loaded CET1 reached 11.45 per cent in 1Q17. CET1 ratio above 12 per cent pro forma including Pioneer and Bank Pekao disposals (ca. 1.5p.p.) and factoring in the RWA dynamics expected in 2017.

 - Improve asset quality: ongoing balance sheet de-risking with Group gross non performing exposures (NPE) down to €55.3 bn in 1Q17 from €56.3 bn in 4Q16. The risk profile decreased, with NPE ratio reduced from 11.8 per cent in 4Q16 to 11.4 per cent at the end of March 2017. Coverage ratio improved by 0.7 p.p. to 56.3 per cent in 1Q17.
Gross NPE disposals reached around €300 m; further disposals were completed for around €400 m in April. UniCredit is taking further decisive steps to address the NPE issue and has signed an agreement to dispose of a €500 mn leasing portfolio. The sale will impact 2Q17 results.
Project FINO is progressing according to plan.
The expected loss on performing stock is improving from 0.43 per cent in 4Q16 to 0.39 per cent in 1Q17, confirming UniCredit's focus on high quality business.
In addition, to further accelerate the de-leveraging of the Non Core portfolio, the Board of Directors of UniCredit S.p.A. approved in April an NPE Transformation Operational Plan. This plan is coherent with Transform 2019 and the ECB guidance on NPE that was published in March 2017. As part of this initiative a new unit has been created and will be headed by TJ Lim, in addition to his role as Deputy Group Chief Risk Officer.

 - Transform operating model: good progress of cost cutting initiatives launched to further improve operating efficiencies.
In 1Q17, the Group branch closure program is well on track and the Group now has 3,470 branches in Western Europe (-66 units Q/Q, -268 units Y/Y) and 1,793 in CEE (-8 units Q/Q, -107 units Y/Y), meaning 36 per cent of the 2019 target of 944 closures by 2019 has already been achieved.
The aim to create a sustainable lower cost structure is supported by the reduction of ca. 1,900 FTE in 1Q17 which corresponds to 32 per cent of total planned by 2019. FTE were down 7 per cent in 1Q17 in support functions and operations vs target of 19 per cent in 2019.

- Maximize commercial bank value: as of February 2017 a new simplified network set up of Commercial Banking Italy is in place and 500 transformation agents have been appointed to help drive the implementation of Transform 2019. This new structure is yielding early results with an improvement in performance in the second half of the quarter.
The strategic partnerships are progressing in order to strengthen the commercial bank value proposition:
-    the Alipay - UniCredit agreement is operational since April 2017, allowing Chinese customers to use Alipay - the world's largest online and mobile payment platform - to purchase goods and services in Italy. The partnership with Alipay creates a platform that brings together companies and territory, encompassing a potential of 120,000 merchants.
-    Amundi - UniCredit distribution agreement signed, extending UniCredit's funds offer of Amundi products providing a wider range of products and aiming to boost Assets Under Management (AUM).
The focus on multichannel approach continued across the Group with positive results:
-    remote sales increased in Italy by c. 60 per cent Y/Y;
-    in CEE, the focus on customer acquisition is continuing, with an increasing penetration of online and mobile users reaching 37.5 per cent and 23.7 per cent, respectively.
UniCredit's fully plugged in CIB confirmed its strengths as a debt financing house with a leading role in large deals as well as multiple domestic midcap transactions.

- Adopt a lean but steering Group Corporate Center (GCC): the lower weight of Group Corporate Center is visible with a reduction in operating expenses of ca. 11 per cent, combined with a reduction of almost 6 per cent of FTEs as a result of ongoing restructuring initiatives. GCC weight on Group total costs was down to 3.7 per cent, from 5.4 per cent in 4Q16, confirming the constant progression towards 2.9 per cent Transform 2019 target.  


Euro (m) 1Q16 Adj. 4Q16 Adj. 1Q17 ∆ % vs. 4Q16 Adj. ∆ % vs. 1Q16 Adj.
Total Revenues 4.674 4.327 4.833 +11,7% +3,4%
Operating Expenses -2.976 -2.930 -2.886 -1,5% -3,0%
LLP -760 -1.486 -670 -54,9% -11,8%
Net Profit 645 -352 907 n.m. +40,6%
Fully Loaded CET1 ratio 10,45% 11,15% 11,45% +0,3pp +1,0pp
ROTE 6,1% n.m 9,4% n.m. +3,4pp
Loans (excl. repos) 421.077 417.868 419.267 +0,3% -0,4%
Gross NPE 77.064 56.342 55.300 -1,8% -28,2%
Deposits (excl. repos) 379.626 395.979 391.645 -1,1% +3,2%
Cost income 63,7% 67,7% 59,7% -8,0 pp -3,9 pp
Cost of risk (bp) 67 132 60 -72 -8

Revenues increased to €4.8 bn in 1Q17 (+11.7 per cent Q/Q, +3.4 per cent Y/Y) benefiting from some degree of seasonality and from a strong business focus: net interest income stood at €2.6 bn (-2.5 per cent Y/Y), in line with projections and fees rose to €1.5 bn (+4.5 per cent Y/Y). The quarterly progression was confirmed with core revenues (net interest income and fees) up by 8.7 per cent Q/Q. Trading income posted an improvement of 28.6 per cent Q/Q and 75.1 per cent Y/Y, thanks to some large customer driven transactions in CIB. Main contributions to revenues came from Commercial Banking Italy, CIB and CEE.


Net interest income (NII) [8] stabilized at €2.6 bn in 1Q17 (+6.2 per cent Q/Q, -2.5 per cent Y/Y). Net of days & FX effects and impact on NII from charges booked in 4Q16 as non-operating items [9], on a quarterly basis the positive commercial dynamics (+€72 m) was sustained by increasing loan rates (+€18 m), lower cost of term funding (+€41 m), re-pricing of deposit rates (+€18 m) lower deposit volumes (+€2 m) and by the recognition of TLTRO benefit (+€38 m) more than offsetting the compression on loan volumes (-€46 m). On a yearly basis the commercial dynamics contributed €100 m to NII. The non-commercial evolution was partially affected by the negative dynamics of the investment portfolio and treasury activities (-€6 m Q/Q, -€176 m Y/Y).


Net interest margin [10] increased from 1.33 per cent in 1Q16 to 1.36 per cent in 1Q17.


Customer loans [11] amounted to €419.3 bn in 1Q17 (+0.3 per cent Q/Q, -0.4 per cent Y/Y), excluding markets counterparts (e.g. repo). Excluding loans reduction in Non Core, customer loans improved by 0.5 per cent Q/Q and 3.4 per cent Y/Y. The main contributors to customer loans were Commercial Banking Italy (€135.6 bn), Commercial Banking Germany (€83.3 bn) and CIB (€73.9 bn). Customer deposits [12] totalled to €391.6 bn in 1Q17 (-1.1 per cent Q/Q, +3.2 per cent Y/Y) with the highest contributions coming from Commercial Banking Italy (€132.7 bn), Commercial Banking Germany (€83.8 bn) and CEE (€60.9 bn). Customer spreads stabilised across divisions and reached 2.6 per cent in 1Q17 at Group level.


Dividends and other income [13] totalled €170 m in 1Q17 (+15.0 per cent Q/Q, -19.7 per cent Y/Y). Yapi Kredi contribution increased by over 50 per cent Y/Y at constant FX mainly thanks to strong performance in net interest dynamics (loans volumes up and lower cost of funding) and fee income.


Fees and commissions improved to €1.5 bn in 1Q17 (+13.5 per cent Q/Q, +4.5 per cent Y/Y) mainly driven by an improvement in investment services. Adjusting the data excluding the temporary effect of Pioneer and Pekao classified under IFRS5, total fees and commissions further increased to €1.7 bn in 1Q17 (+11.5 per cent Q/Q, +4.6 per cent Y/Y on a pro forma basis). The highest contribution to fees generation came from investment services rising to €704 m in 1Q17 (+21.3 per cent Q/Q, +8.4 per cent Y/Y on a pro forma basis) boosted by AUM sales underpinning strong upfront and management fees. Financing services fees amounted to €443 m in 1Q17 improving by 14.8 per cent Q/Q mainly driven by higher capital markets transactions in CIB, but reducing by 8.6 per cent Y/Y mainly due to lower money supply activity. Transactional fees reached €559 m, decreasing by 0.8 per cent Q/Q but improving 12.4 per cent Y/Y thanks to higher cash management and payment services.


The rise in Total Financial Assets (TFA) [14] to €796.8 bn as of March 2017 (+5.4 bn Q/Q, +30.2 bn Y/Y) was sustained by positive contributions from all commercial banks and was driven by high value added products. AUM amounted to €203.4 bn (+€6.3 bn Q/Q, +€15.3 bn Y/Y) thanks to improved commercial dynamics driven by higher net sales mainly in investment funds and bancassurance products. In particular, Commercial Banking Italy strengthened its commercial power with AUM/TFA ratio increased to 35.0 per cent. Assets under Custody rose to €212.9 bn (+€1.5 bn Q/Q, +€0.2 bn Y/Y) and Deposits totaled €380.5 bn (-€2.4 bn Q/Q, +€14.7 bn Y/Y).


Higher trading income at €590 m in 1Q17 (+28.6 per cent Q/Q, +75.1 per cent Y/Y) thanks to solid customer driven activities. In particular, CIB benefitted from revenues related to some large client driven transactions.


Total costs well under control, down to €2.9 bn in 1Q17 (-1.5 per cent Q/Q, -3.0 per cent Y/Y) and in line with Transform 2019 objectives. In particular, a positive progression was seen in staff expenses at €1.8 bn in 1Q17, decreasing Q/Q net of variable compensation release in 4Q16 (ca. €100 m) and confirming a continued reduction Y/Y. The focus on cost savings is sustained by a lower number of employees at 96,423 [15] down by ca. 1,900 FTE Q/Q primarily in Western Europe. Branches [16] decreased by 74 units in 1Q17 to 5,263 (of which 3,470 in Western Europe and 1,793 in CEE). Non HR Costs [17] came to €1.1 bn in 1Q17 (-10.6 per cent Q/Q, -1.1 per cent Y/Y). Lower depreciations of €193 m in 1Q17 due to write-offs of intangibles in 2016. Cost/income ratio amounted to 59.7 per cent in 1Q17 (-8.0 p.p. Q/Q [18], -3.9 p.p. Y/Y).


Gross operating profit reached €1.9 bn in 1Q17 (+39.4 per cent Q/Q, +14.6 per cent Y/Y).


LLP reduced to €670 m in 1Q17 (-54.9 per cent Q/Q, -11.8 per cent Y/Y) confirming the positive asset quality trend. Credit risk well managed with a cost of risk of 60 bp in 1Q17 (-72 bp Q/Q, -8 bp Y/Y). The target of 65 bp for FY17 is confirmed.


Solid net operating profit of €1.3 bn in 1Q17 (n.m. Q/Q, +36.1 per cent Y/Y) confirming the strong business momentum seen across all divisions.


Other charges and provisions totalled €463 m in 1Q17 (+89.9 per cent Q/Q, +21.6 per cent Y/Y). In particular, the systemic charges amounted to €434 [19] m in 1Q17 of which €295 m of contribution to the Single Resolution Fund for FY17 entirely booked in 1Q17.


Income tax at €212 m in 1Q17 (n.m. Q/Q, +7.3 per cent Y/Y) translating into a tax rate of 25 per cent at Group level.


Profit from discontinued operations amounted to €376 m in 1Q17 [20] reflecting the classification as held for sale of Pioneer and Bank Pekao and the temporary accounting effect of IFRS5 on fees (€224 m) to reverse back on the fee income line upon Pioneer closing, based on Amundi distribution agreement.


Group net profit increased to €907 m in 1Q17 supported by exceptionally high trading income, strong fees generation and lower LLP. Positive results achieved by all business divisions, with Commercial Banking Italy, CIB and CEE contributing the most earnings. Stated RoTE stands at 9.4 per cent in 1Q17 given the strong seasonal profitability. Excluding all the effects from the disposals of Pekao and Pioneer, as per the Capital Markets Day perimeter, and assuming the full impact of the rights issue throughout the quarter, ROTE stands at 7.0 per cent.



Group gross non performing exposures (NPE) reduced by ca. 30 per cent in the last twelve months to €55.3 bn in 1Q17 with a Gross NPE ratio down to 11.4 per cent (-0.4 p.p. Q/Q, -4.1 p.p. Y/Y).


Net NPE decreased to €24.2 bn (-3.4 per cent Q/Q, -35.6 per cent Y/Y) progressing towards the target of €20 bn in 2019 as per Transform 2019. Net NPE ratio stood at 5.3 per cent in 1Q17 (-0.3 p.p. Q/Q, -2.9 p.p. Y/Y). Coverage ratio strengthened to 56.3 per cent in 1Q17 (+0.7 p.p. Q/Q, +5.0 p.p. Y/Y). Gross bad loans further down at €31.1 bn in 1Q17 (-2.2 per cent Q/Q, -38.8 per cent Y/Y) with a coverage ratio improving to 66.6 per cent (+1.0 p.p. Q/Q, +5.8 p.p. Y/Y) reflecting the rigorous approach to provisioning. Gross unlikely to pay decreased to €22.9 bn (-1.3 per cent Q/Q, -5.3 per cent Y/Y), with a higher coverage ratio at 43.7 per cent (+0.4 p.p. Q/Q, +10.1 p.p. Y/Y). Past due loans reduced to €1.3 bn in 1Q17 (-2.4 per cent Q/Q, -36.9 per cent Y/Y) with a coverage ratio of 33.2 per cent (-1.0 p.p. Q/Q, +5.8 p.p. Y/Y).


Group asset quality excluding Non Core reported gross NPE at €24.4n bn in 1Q17, gross NPE ratio at 5.4 per cent, and coverage ratio at 55.2 per cent. Gross bad loans stood at €12.1 bn with a coverage ratio at 69.8 per cent. Gross unlikely to pay stood at €11.1 bn with a coverage ratio at 41.6 per cent.


Asset Quality in Commercial Banking Italy showed gross NPE at €10.0 bn, with a gross NPE ratio at 7.0 per cent and a higher coverage ratio at 53.5 per cent reflecting a prudent stance. Net NPE totalled €4.6 bn with a net NPE ratio at 3.4 per cent in 1Q17. A similar trend was registered also in gross bad loans (+8.1 per cent Q/Q and +31.1 per cent Y/Y) and gross unlikely to pay (+0.2 per cent Q/Q and +13.3 per cent Y/Y) with a coverage ratio of 69.6 per cent and 39.9 per cent respectively in 1Q17.


Inflows to NPE in Commercial Banking Italy reached €647 m, the lowest level since 1Q16, with a cure rate of 10.2 per cent in 1Q17. Default ratio dropped to 2.0 per cent in 1Q17 from 3.1 per cent in 4Q16 and 2.3 per cent in 1Q16. Unlikely-to-pay migrating to bad loans showed a slower pace (28.3 per cent in 1Q17 vs 49.5 per cent in 4Q16) confirming asset quality progression.


In CEE NPE decreased from €6.4 bn at the end of 4Q16 to €6.1 bn in 1Q17, driven by sales of bad loans portfolios (€0.1 bn disposals in 1Q17 and additional €0.4 bn already signed off and classified as held for sale) together with efficient collection activities.


Decisive actions in asset quality were confirmed by the continuous rundown of the Non-Core portfolio with Gross loans reduced to €36.4 bn in 1Q17 (-€0.8 bn Q/Q, -€24.1 bn Y/Y) thanks to: i) improving repayments (€0.1 bn), ii) recoveries (€0.3 bn), iii) write-offs (€0.2 bn) and iv) disposals (€0.1 bn). Gross NPE reduced to €30.9 bn in 1Q17 (-1.8 per cent Q/Q and -39.8 per cent Y/Y) and NPE ratio moved to 85.0 per cent (+0.2 p.p. Q/Q,        +0.1 p.p. Y/Y). Net NPE down at €13.2 bn (-3.6 per cent Q/Q, -45.7 per cent Y/Y) with a net NPE ratio at 71.7 per cent (flat Q/Q, -1.9p.p. Y/Y). Coverage ratio rose to 57.2 per cent in 1Q17 (+0.8 p.p. Q/Q, +4.7 p.p. Y/Y).





The positive results registered at Group level made a significant contribution to strengthening the CET1 ratio fully loaded at 11.45 per cent in 1Q17, improving by 30 bp compared to 4Q16 CET1 ratio registered post capital increase and by 100 bp compared to 1Q16 [21]. CET1 benefited from the positive contribution from 1Q17 earnings generation (+23 bp Q/Q)[22] and RWA reduction (+14 bp Q/Q), partially offset by dividend accrual, AT1 and Cashes coupon payments (-6 bp Q/Q) and by revaluation reserve negative dynamics (-2 bp Q/Q). Including the positive impact from Bank Pekao and Pioneer ongoing disposals (ca. +150 bp) CET1 fully loaded would improve to above 12 per cent pro forma.


The CET1 ratio guidance is confirmed above 12 per cent for 2017 - including a degree of procyclicality and model impacts on RWAs - showing a solid capital generation as envisaged in Transform 2019.


In 1Q17, CET1 ratio transitional improved to 11.71 per cent, Tier 1 ratio transitional stands at 12.65 per cent and Total Capital ratio transitional at 15.20 per cent. All ratios are confirmed above the capital requirements [23].


RWA transitional moved to €385.3 bn in 1Q17 decreasing by €1.9 bn since December 2016 and by €5.3 bn excluding the thresholds effect [24]. In particular, a reduction was registered in market RWA (-€2.0 bn Q/Q) benefitting from model changes, while operational and credit RWA were almost flat. Credit RWA were stable in the quarter as a result of the reversal of thresholds (+€3.4 bn), business evolution (almost flat), business actions (-€0.3 bn), procyclicality & models (broadly flat), regulation (-€1.6 bn) and FX (+€0.3 bn) [25].


Leverage ratio fully loaded at 4.62 per cent as of Mar-17;  Leverage Ratio transitional stood at 4.85 per cent.


Funding plan 2017 was executed for about €6.4 bn as of end of April, equal to 24 per cent of the total funding plan expected to be executed in FY17. In particular, on April 5th 2017, the new $30 bn Global MTN Program was established, providing an innovative structure in Italy (combining RegS and 144A format) allowing UniCredit to distribute notes to institutional investors globally. The set-up of the Program represents an important step in the implementation of Transform 2019, allowing the bank to further diversify its funding sources and to establish a benchmark curve in USD over time. As of today, $2.0 bn have been issued under this Program. The overall outstanding amount of TLTRO II is equal to €51.2 bn on a consolidated basis [26], including the additional TLTRO II of €24.4 bn [27] drawdown during the recent auction last March.




[1]Please consider that in this paragraph "1Q17 Highlights" and in "UniCredit Group Consolidated Results" section, some adjustments were included for 1Q16 and 4Q16 Group results. In particular, 1Q16 net profit has been adjusted for the net additional impact of Defined Benefit Obligation (DBO) in Austria and integration costs in Italy; 4Q16 was adjusted for non-recurring items related to Transform 2019.  Therefore changes referred to Q/Q and Y/Y are calculated vs 1Q16 and 4Q16 adjusted numbers.

[2]Return on Tangible Equity: annualized net income / average tangible equity (excluding AT1 and intangible from Bank Pekao and Pioneer). Adjusted RoTE assuming the full impact of the right issue in 1Q17 and excluding all effects from Bank Pekao and Pioneer disposals, as per the Capital Markets Day (CMD).

[3] Including the benefit of the capital increase which led to overcome the 4Q16 deductions related to regulatory thresholds for investments in capital instruments issued by financial sector entities and deferred tax assets that rely on future profitability and arise from temporary differences (equal to 41 bp in 4Q16).

[4] The perimeter of Non Performing Exposures (NPE) as per definition of EBA is substantially equivalent to perimeter of impaired exposures as per BankIT Circular 272. NPE are broken down in bad exposures, unlikely-to-pay and past due.

[5] Without including additional disposals of €0.1 bn in 1Q17 in Turkey, that is valued at equity method.

[6] Retail branches in Italy, Germany and Austria as indicated during the CMD.

[7] Full Time Equivalent. Please consider that Group FTE are shown excluding i) Ukrsotsbank (sold in 4Q16), Pioneer, Bank Pekao, and Immo Holding that are classified under IFRS5 and ii) Ocean Breeze.

[8] Contribution from macro hedging strategy on non naturally hedged sight deposits in 1Q17 at €380 m (-€9 m Q/Q and -€3 m Y/Y).

[9] Net interest in 4Q16 affected by charges previously booked as non-operating items for c. €100 m related to FY16 entirely booked in 4Q16.

[10] Net interest margin calculated as interest income on earning assets minus interest expenses on earning liabilities.

[11] End of period accounting volumes calculated excluding repos and, for divisions, excluding also intercompany items. Customer loans including repos amounted to €452.8 bn as of end March 17 (+1.8 per cent Q/Q, -0.7 per cent Y/Y).

[12] End of period accounting volumes calculated excluding repos and for divisions, excluding also intercompany items. Customer deposits including repos amounted to €438.0 bn as of end March 17 (-3.2 per cent Q/Q, -2.5 per cent Y/Y).

[13] Include dividends, equity investments evaluated with equity method. Turkey contribution based on a divisional view.

[14] Commercial Total Financial Assets which exclude market counterparts.

[15] Excluding FTE related to industrial legal entities fully consolidated.

[16] Branches excluding Ukrsotsbank for 1Q16, Pioneer, Bank Pekao and Immo Holding, in line with the perimeter considered in Transform 2019.

[17] Other administrative expenses net of expenses recovery and indirect costs, depreciations and amortizations.

[18] Delta based on 4Q16 C/I adjusted by non-recurring items related to the Transform 2019 impacting costs and revenues.

[19] Referring to: (i) bank levies of €64 m, (ii) Deposit Guarantee Scheme of €75 m and (iii) Single Resolution Fund of €295 m.

[20] Considering intercompany elisions.

[21 ]Delta based on both 1Q16 and on 4Q16 adjusted data.

22] The net profit for the first quarter 2017 is included in Own Funds according to the request submitted to competent Authority according to CRR Article 26(2).

[23] SREP relevant requirements for 2017: 8.77 per cent CET1 ratio (4.5 per cent P1 + 2.5 per cent P2 + 1.77 per cent combined capital buffer); 10.27 per cent T1 ratio (6 per cent P1 + 2.5 per cent P2 + 1.77 per cent combined capital buffer); 12.27% Total Capital ratio (8 per cent P1 + 2.5 per cent P2 + 1.77 per cent combined capital buffer).

[24] Dec16 RWA transitional adjusted to €390.6 bn considering the effects as explained in Note 3 of this document.

[25] Business evolution: changes related to business development; Business actions: initiatives to proactively decrease RWA (mainly securitizations). Models: methodological changes to existing/ new models; procyclicality: change in macro-economic framework or client's credit worthiness. regulation: changes in regulation (e.g. CRR or CRD). FX: translation of non-euro denominated exposures.

[26] €33.6 bn have been taken in Italy, €12.6 bn in Germany, €4.0 bn in Austria, €0.9 bn in CEE.

[27] €15.5 bn have been taken in Italy, €5.6 bn in Germany, €3.0 bn in Austria and €0.3 bn in CEE.




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MILAN, MAY 11, 2017 - 10.00 CET


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