UBI Banca Group

mortgages (-€6.5 million) and the loss on disposals and repurchases of financial liabilities
(-€0.8 million), while a profit of €0.6 million was earned on fair value changes in hedges on
bonds and of €2.7 million on trading activity.
Other net operating income and expense fell to €3.9 million from €7.8 million the year before.
As already reported, in 2010 the item had benefited from extraordinary recoveries (€2.4
million) and a non-recurring contribution of approximately one million euro resulting from the
sale of corresponding banking contracts to RBC Dexia.
As concerns operating expenses, personnel expense decreased by 7.4% (down from €137.3
million to €127.1 million), attributable primarily to a reduction in average personnel numbers
notwithstanding an increase in the average cost of the different components of employment
contracts (company bonus and salary and incentive scheme trends).
Other administrative expenses of €106.4 million fell by almost €10 million compared to the
previous year, as a result of a reduction in intragroup service fees (-€3.8 million) and in “rent
payable” (-€2.4 million) in addition to savings on the following: “telephone and data
transmission expenses”, “postal expenses”, “property and equipment maintenance” and
“professional and advisory services” expenses (for total savings of €2.6 million).
Net impairment losses on property, equipment and investment property and intangible assets
amounted to €7.1 million, an increase of approximately €1 million euro.
As a result of the performance reported above, the cost:income ratio improved considerably
falling from 76.8% to 67.4%.
Net impairment losses on loans fell to €25.2 million (-€5.6 million), as a result of constant
attention paid to monitoring and risk management, which helped to improve the quality of the
portfolio. Provisions for risks and charges, which included provisions made to meet existing
litigation risks (compounding of interest, investment services, bonds, banking contracts and
clawback revocatory proceedings), also fell, down from €2.7 million to €2.1 million.
As concerns balance sheet items, loans to customers amounted to €8.6 billion a decrease
compared to €8.9 billion in 2010, reflecting falls in short term lending (“current account
overdrafts” and “other transactions”), which were only partially offset by growth in mortgages
and other forms of medium to long-term lending, which rose to €5.8 billion (68.2% of total
lending).
Net deteriorated loans, amounting to €552.3 million, remained virtually unchanged compared
to €549.5 million the year before.
In detail, increases were recorded in net non-performing loans, up from €263.3 million to
€308.7 million, and in restructured exposures, up from €42.3 million to €53.4 million, while
impaired loans reduced from €225 million to €184.4 million, together with past due loans,
which fell from €18.9 million to €5.8 million, as a result of a significant decrease in arrears for
between 90 and 180 days relating to exposures secured by real estate property (€5.1 million
compared to €18.3 million at the end of 2010).
At the end of the year the direct funding of the Bank totalled €7.5 billion, down by €0.7 billion,
attributable in particular to securities issued (-€0.5 billion), the result, amongst other things,
of the early redemption of a bond subscribed by the Parent amounting to €180 million.
At the same time, indirect funding from private customers also fell with respect to 2010, falling
from €11.2 billion to €10 billion, affected by negative performance by financial markets and by
a decrease in net inflows of new subscriptions.
All the main components recorded decreases: assets under custody fell to €5.9 billion (€6.5
billion in December 2010), while assets under management amounted to €4.1 billion (€4.7
billion), penalised by the trend in the mutual fund and Sicav sectors (-€0.5 billion to €2
billion).
At the end of 2011, the net interbank position was one of debt of €0.1 billion (funds of €0.3
billion twelve months before), due to increased debt to the Parent, in the form of both current
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