UBI Banca Group

- net commission income rose to €316 million (+€13.8 million), the aggregate result of an
overall decrease in commissions on indirect funding, which was more than offset by an
increase in commissions on current accounts (which also included those for commitment
fees);
- the contribution from net income from trading, hedging and disposals and repurchases,
amounting to €2.1 million, was down on the previous year (-€7.5 million), due mainly to the
negative impacts of hedges on fixed rate mortgages and on fair value changes in hedges on
bonds;
- other net operating income and expense increased to €21.4 million (+€8.1 million) benefiting
to a large extent from net income from securitisations and covered bonds, as well as
increased tax recoveries.
Expenses included:
- personnel expense down to €272.4 million (-€4.9 million). Both years were affected by
extraordinary items 1 , net of which this expense increased by €12.1 million from 271.2
million to €283.3 million, as a result of greater costs for company bonuses, salary trends
and incentive schemes, partly offset by decreases in average personnel numbers;
- the overall reduction in other administrative expenses to €197 million (-€7 million) is the
aggregate result of a significant containment in the cost of some items (-€2.4 million for
professional and advisory services; -€1.6 million for outsourced services; -€1.4 million for
postal expenses and -€1.2 million for both credit recovery and rent payable), while the few
items which increased included the tenancy of premises (+€1.6 million), fees for services
provided by Group companies (+€1.5 million) and above all indirect taxes (+€3.7 million);
- impairment losses on tangible and intangible assets increased by €0.5 million a €7.7
million.
As a result of the performance reported above, the cost:income ratio improved from 63.5% to
56.6%.
Net impairment losses on loans fell from €96.2 million to €83.1 million (-€13.1 million),
including €73.6 million for specific impairment losses recognised on deteriorated loans (€48.5
million on non-performing loans and €19 million on impaired loans) and €9.5 million for
collective impairment losses on performing loans. The loan loss rate stood at 0.42% compared
to 0.47% twelve months before.
A sum of €1.5 million – classified within profits from the disposal of equity investments –
contributed to pre-tax profit. It related to the sale of a property previously used as a branch
which was then closed in 2010, when the distribution network was rationalised.
As concerns the balance sheet, loans fell progressively from €20.3 billion to €19.6 billion (-€0.7
billion; -3.3%), while the composition changed with an increase in mortgages and other
medium to long-term loans (+€0.9 billion to €12.7 billion), accounting for 64.6% of total loans
(58.1% in December 2010). On the other hand, short-term loans decreased, especially with
regard to “Other transactions” (-€0.9 billion to €2.5 billion) affected by the repayment of some
significant loans to “large corporate” clients. In terms of type of borrower, loans to “households
and local businesses” increased by 4.5% year-on-year, while loans to the large corporate
segment already mentioned decreased by 33.3%, consistent with the objective of not failing to
provide support and liquidity to local economies.
From the viewpoint of the quality of lending, net deteriorated loans increased over twelve
months from €1,061.8 million to €1,212.5 million (+€150.7 million), although the trend
reversed in the fourth quarter: +€95.1 million to €448.4 million for non-performing loans 2
mainly due to transfers from impaired loans; +€92.5 million to €472.1 million for impaired
loans, fuelled above all by new classifications from performing loans; -€31 million to €270
million for restructured loans; -€5.9 million to €22 million for exposures past due and in
arrears. Within the latter, exposures in arrears for between 90 and 180 days relating to
1 The figure for 2011 benefited from the release of provisions set aside previously and better than expected results amounting to €10.9
million before tax. In 2010, on the other hand, the item included higher expense of €6.1 million for leaving incentives, again before
tax.
2 In the second quarter, Banca Popolare di Bergamo disposed of unsecured non-performing loans amounting to €2.4 million, written
down by 87.5%, which gave rise to a net loss on the sale of €0.2 million.
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