PREFACE - EXTRAORDINARY POSITIVE TAX EFFECT FOR €887 M RELATED TO IFRS9 FIRST TIME ADOPTION (FTA) ON 4Q18 STATED NET PROFIT
As communicated in the Consolidated Interim Report as at 31 March 2018 - Press Release (page 1 - footnote 2), UniCredit took a gross impact of -€3.8 bn for the FTA of IFRS9 on 1 January 2018. According to established accounting practices, such impact was taken at equity and had no impact on the Group's P&L. UniCredit S.p.A. did not book any positive tax impact in Italy related to IFRS9 FTA .
Following the publication of the recent Italian Budget Law, it has been ruled that such IFRS9 FTA shall become tax deductible over 10 years, rather than to be taken all at once in the first year. Taking into account the relevant accounting treatment, this change will accelerate the booking of the positive tax effects  associated to IFRS9 FTA at the current tax rate, as for all Italian banks, of around 33 per cent; for UniCredit this results in a positive effect of +€887 m .
As the FTA was recognised at equity, a coherent representation for the related tax impact should have been at equity as well.
However, based on the very recent indications received from the relevant Authorities, UniCredit has now recognised such positive tax effect related to IFRS9 FTA through its P&L in 4Q18, generating a positive extraordinary effect equivalent to +€887 m3. The application of such accounting treatment has resulted in a stated 4Q18 net profit of €1,727 m. Excluding such positive tax effect, the 4Q18 would have recorded a net profit of €840 m.
In what follows, UniCredit will focus its analysis on the adjusted net profit that does not contain the above mentioned positive one-off tax impact, so as to reflect what UniCredit considers the economic performance of the Group in the period. The regulatory capital and dividend implications will be clarified on the following pages.