UBI Banca Group

- net interest income reached €168.4 million (+€21 million), mainly as a result of pricing
policies implemented on loans as a whole and on mortgages in particular;
- the fall in dividends (-€0.9 million to €0.4 million) arose from the absence of a dividend
distributed by the subsidiary Banco di San Giorgio;
- net commission income fell slightly to €97.9 million (-€1.4 million), the aggregate result of a
fall in items relating to indirect funding, consisting of the placement of third party securities
and the distribution of third party services, while an increase was recorded on commissions
on current accounts (which also included those for commitment fees);
- net trading and hedging activity again recorded a loss of €0.5 million, although this was an
improvement compared to the loss of €0.9 million the year before. It was affected by the
negative impact of hedges on fixed rate mortgages and the repurchase of own bonds on the
secondary market, which was only partially offset by gains from fair value changes in
hedges on bonds;
- other net operating income and expense fell to €6.8 million (-€2 million) due to the absence
of extraordinary components, which the 2010 result had benefited from.
Expenses included:
- personnel expense of €109.4 million, almost unchanged compared to €110.1 million before
which, however, included redundancy expenses of €2.3 million. Net of that non recurring
item, this expense increased by €1.8 million, the aggregate result of opposing trends with a
reduction in personnel numbers on the one hand and an increase in the average cost of the
components of employment contracts on the other;
- other administrative expenses fell to €75.9 million (-€5 million), benefiting from an attentive
policy to control expenses and improve efficiency, which resulted in significant savings on
the following: telephone data transmission expenses (-€2 million 6 ), insurance premiums
(-€1.4 million), outsourced services (-€0.9 million), professional and advisory services (-€0.6
million) and postal expenses (-€0.5 million). The most significant increases, on the other
hand, were for tenancy of premises expenses (+€0.7 million) and above all for indirect taxes
(+€1.2 million);
- net impairment losses on property, equipment and investment property and intangible
assets (+€1 million to €7.7 million) included the depreciation on the new headquarters in
Turin, to which General Management and central offices previously located in Milan and
decentralised units at Cuneo were transferred in January 2011.
As a result of the performance reported above, the cost:income ratio improved from 77.2% to
70.7%.
Net impairment losses on loans fell slightly to approximately €27 million (-€0.4 million) and
included specific impairment losses on non-performing loans of €25.2 million (€23.4 million in
2010) and collective impairment losses on performing loans of €1.8 million (€4 million in
2010).
On the other hand, net impairment losses on other assets and liabilities increased to €1.1
million (+€1 million), including €0.6 million 7 relating to available-for-sale financial assets and
€0.5 million to guarantees.
Net provisions for risks and charges of approximately €1 million were recognised in relation to
risks for current litigation, while net reversals of €3.3 million were recognised in 2010, which
had benefited from a release of €3.9 million as a result of a settlement agreement concerning
litigation with the Ministry of the Economy and Finance.
The income statement also recorded a loss on the disposal of investments and impairment
losses on goodwill amounting to €0.2 million, which included an impairment loss on the
goodwill relating to the French branch in Nice, while the 2010 figure originated from the gross
gain, already mentioned, of €230.7 million made on the disposal of the interest held in BPCI.
6 Due, amongst other things, to the absence of an expense for participation in a guarantee system designed to cover the costs of
damages resulting from the fraudulent use of magnetic strip cards (subject to mass replacement with cards fitted with microchips in
2010).
7 This included €0.40 million in 2011, relating to the new investment in the fund Eptasviluppo.
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