UBI Banca Group

- the partial non deductibility of interest expense (4%), introduced by Law No. 133 of 6 th
August 2008 accounting for 6.2 percentage points;
- non-tax deductible expenses, costs and provisions accounting for 1.6 percentage points;
- the total non-deductibility for IRAP purposes of net impairment losses on loans, provisions
for risks and charges and personnel expense and the partial non deductibility of other
administrative expenses and depreciation and amortisation, accounting for 26.1 percentage
points.
These impacts were only partially offset by the effect of the “aid to economic growth”
concessions (1.6 percentage points), by the effect of tax exemption on dividends (1.1
percentage points), by the valuation of equity investments according to the equity method, not
significant for tax purposes (0.9 percentage points) and by the disposal of equity investments
covered by the participation exemption regime (0.5 percentage points).
On a quarterly basis, taxes (normalised) fell to €50.2 million from €63.4 million in third
quarter of 2011 (€33.3 million in the fourth quarter of 2010) to give a tax rate of 67.25%
compared to 66.24% in the previous quarter. These changes reflect both developments in the
tax base and the different structure of income in the two periods, as well as different trends
relating to taxable components for IRAP purposes.
Finally in 2010 a post-tax profit from discontinued operations of €83.4 million (non-recurring) was
recognised in relation to the contribution of the “depository banking operations” in May 2010 by the
Parent to RBC Dexia Investor Services (over €1 million, approximately, related to BPCI, recognised within
operating income and expense, resulting from the disposal at the same time of correspondent banking
contracts).
As a result of the performance already reported and as a result of the greater profits earned by
the principal banks in the Group, profit for the period attributable to non-controlling interests
(inclusive of the effects of consolidation entries) rose to €28.8 million from €13.6 million in
2010.
In compliance with IAS 36 (Impairment of Assets), the recoverability of the carrying amounts
for indefinite useful life intangible assets (goodwill) and finite useful life intangible (brands,
core deposits and assets under management), recognised following the merger of the former
BPU Group and the former BLP Group must be tested annually.
On the basis of the impairment tests carried out at the end of December 2011, that
recoverability was no longer guaranteed. This was due, on the one hand, to lower future
income flows in the light of the significant deterioration in the economic environment
compared to assumptions made in the 2011-2015 Business Plan, which were used as a basis
for the impairment tests conducted in June 2011, and on the other hand to a higher discount
rate used to estimate the final amounts (opportunity cost of capital), penalised by country risk.
The reclassified income statement contains a single item, stated net of taxes and noncontrolling
interests, for net impairment losses on goodwill (item 260) and impairment losses on
finite useful life intangible assets (part of item 210) recognised for the year, which totalled
€2,190.9 million (€5.2 million in 2010 17 ). They were composed of €1,865.5 million for
impairment losses on goodwill and €305.9 million for impairment losses on finite useful life
intangible assets, while the remaining €19.5 million (recognised in the second quarter of the
year) relates to the full impairment loss on intangible assets associated with the investment in
BY YOU (partially disposed of in April 2011), following the renegotiation of distribution
agreements.
In detail, the impairment test gave rise to total impairment losses of €2,396.8 million,
composed as follows:
• €1,873.8 million for the total impairment loss recognised on goodwill, of which:
17 The preceding comparative periods have also been restated on a consistent basis, with the recognition of these impairment losses
on the same line. The amount of €5.2 million for 2010, consisted of €4.1 million from the impairment loss on the goodwill of
Gestioni Lombarda Suisse and a little more than €1 million from the Barberini impairment loss.
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