UBI Banca Group

- dividends and similar income fell from €3.8 million to €1 million and related to
remuneration on investments held in Centrobanca and Arca Sgr;
- net commission income of €112.2 million increased by €6.8 million, benefiting from growth
in commissions on current accounts (including commitment fees) and also on collection and
payment services;
- trading, hedging and disposal and repurchase activities generated a loss of approximately
€1 million (a profit of €3 million in 2010), attributable mainly to the negative impact of
hedges on fixed rate mortgages and losses on the repurchase of financial liabilities, even if
profits were recognised on fair value changes in hedges on bonds and domestic currency
swap business in relation to swaps on certificates of deposit (primarily with Japanese yen);
- other net operating income and expense rose to €3.1 million from €2.7 million the year
before.
Operating expenses, which fell by €3.1 million to €225.6 million, performed as follows:
- personnel expense of €126.6 million increased slightly due to an increase in the average
cost of the components of employment contracts, which was only partially offset by the
reduction in average personnel numbers;
- other administrative expenses, however, fell to €87.4 million (-€3.3 million), due in
particular to lower expenses for rent payable, professional and advisory services,
outsourced services and postal expenses;
- net impairment losses on property, equipment and investment property and intangible
assets also fell to €11.5 million, from €12 million the year before.
As a result of work performed to improve the quality of loans, commenced as far back as 2008
by improving management and monitoring processes, net impairment losses on loans fell
significantly from €51.5 million to €43.3 million (€38 million attributable to specific
impairment losses on loans in default) and the loan loss rate fell as a consequence from 0.67%
to 0.55%.
Net provisions for risks and charges amounted to €1.3 million (€1.1 million in 2010) and
related mainly to litigation concerning financial investments and the compounding of interest.
As concerns the balance sheet, at the end of year loans to customers had reached €7.8 billion
(+1.4% compared to twelve months before), driven by growth in mortgages and other forms of
medium to long-term lending (+6.4% to €5.3 billion), while falls were recorded for current
account overdrafts (-€0.1 billion to €1.4 billion) and other forms of short term lending (-€0.1
billion to €1.1 billion).
The net deteriorated loans of the Bank rose to €661.6 million from €572.3 million in 2010. The
trend affected all categories as follows:
- net non-performing loans increased by 18.2% to €339.8 million and they increased at the
same time as a percentage of total loans from 3.73% to 4.35%;
- impaired loans recorded growth of 7.9% to €273.5 million, accounting for 3.5% of total
loans (3.29% in December 2010);
- restructured exposures almost doubled to €28.9 million due to new classifications of
significant counterparties, while positions past due and/or in arrears amounted to €19.4
million (€15.7 million the year before), of which €11.6 million attributable to exposures in
arrears for between 90 and 180 days backed by mortgages.
Direct funding of €6.4 billion fell by 6% over twelve months. Within the item, securities issued
fell to €2.1 billion (-€0.3 billion), affected mainly by the early redemption of a bond (€350
million) subscribed by the Parent, while growth was recorded in the item “Other certificates”
(+€0.1 billion), composed mainly of certificates of deposit denominated in foreign currency
(primarily Japanese yen).
However, the fall in amounts due to customers was more modest (-€0.1 billion to
approximately €4.4 billion), in relation to new demand for repurchase agreements by
customers.
In a particularly difficult market context, indirect funding also decreased to €3.5 billion from
€3.8 billion in December 2010, penalised by negative performance by all components of assets
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