UBI Banca Group

unsecured non-performing loans (€219.4 million), almost fully written-off, while the remaining
part is due to lower estimated losses on newly classified positions 3 .
Coverage for performing loans, on the other hand, increased to 0.58% from 0.54% in December
2010.
From the viewpoint of the types of loan, as can be seen from the table, “Composition of loans
to customers”, approximately 65% of the annual growth in net deteriorated loans regards the
item “mortgage loans and other medium to long-term loans” backed by collateral, which
results automatically in a lower level of coverage, while 21% relates to the non-banking
financial sector.
NON-PERFORMING LOANS
Gross non-performing loans rose to €4.38 billion from €3.78 billion at the end of 2010, up by
€596.4 million (+15.8%), of which €198.6 million relating to the first quarter, €42.8 million to
the second, €207 million to the third and €148 million to the fourth 4 .
As already reported, the trend for the second quarter includes the effects of the disposal of
unsecured non-performing loans for a total of €119.9 million (€58.5 million relating to B@nca
24-7, €36.1 million to the network banks and €25.3 million to UBI Leasing), while changes in
the fourth quarter incorporated the two additional disposals performed by B@nca 24-7
amounting to €93.1 million and by UBI Leasing amounting to €6.4 million.
Around 90% of the year-on-year increase is attributable to the network banks and to UBI
leasing.
Performance during the year with respect to the previous year saw on the one hand a
reduction of 16% in inflows from other classes of deteriorated exposures (from impaired loans
in particular) and on the other an increase in payments received and disposals.
Gross non-performing loans backed by collateral increased constantly over the twelve month
period to reach €2.65 billion (+€0.60 billion; +29.4%) accounting for 60.6% of total gross loans
(54.2% in December 2010).
On the other hand, net non-performing loans rose from €1.94 billion to €2.48 billion, up by
€541.5 million (+27.9%), of which €131.7 million relating to the first quarter, €123.5 million to
the second quarter, €147.4 million to the third and €138.9 million to the fourth quarter. The
total outstanding at the end of the year included just 11% not backed by any type of guarantee
(collateral or other).
As a result of the trends reported above, the ratio of non-performing loans to loans reached
4.27% in gross terms and to 2.49% in net terms (i.e. net of impairment losses). Despite this,
the credit quality of the Group continues to outperform the average for Italian banks, which is
6.24% for gross non-performing loans and 3.09% for net non-performing loans in the private
sector.
Coverage fell to 43.31% from 48.69% twelve months before, a reflection of both the increase in
the proportion of positions backed by collateral – and therefore with less recognition of
impairment losses – and the disposals of unsecured non-performing loans, almost fully
written-off (98.4%), already mentioned. If the phenomena just mentioned, which accounted for
197 and 263 basis points respectively, is not considered then the coverage for non-performing
loans would have been 47.91%.
Coverage for non-performing loans not backed by collateral, considered gross of write-offs (the
write-off of positions subject to bankruptcy proceedings and the relative impairment losses),
was 77.45% at the end of December (80.82% in December 2010). Net of the disposal of
3 Either as a result of the existence of collateral or because they are operational impairment or restructured loans for which
agreements have been reached to reschedule debt by agreeing to a debt repayment schedule pursuant to article 67 or to a debt
restructuring plan pursuant to article 182-bis of the Bankruptcy Act.
4 A gross exposure of €31 million relating to Fondazione Centro San Raffaele del Monte Tabor was classified as non-performing in the
fourth quarter of 2011.
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