UBI Banca Group

Net operating income fell (-€21.5 million to €86.7 million), the aggregate result of a decrease in
operating income (-€24.7 million to €138.5 million), which was only partially offset by further
reductions in costs (-€3.1 million to €51.9 million).
Income performed as follows:
- net interest income decreased to €86.7 million (-€13.5 million), the result mainly of higher
funding costs (during the year the Bank gave priority to the issue of medium and long-term
instruments to create a greater balance with the duration of loans) and of an attentive loan
selection and pricing policy designed to maintain a constant income from interest bearing
assets;
- dividends (-€0.6 million to €0.9 million) incorporated the lower contribution from the
interest held in IW Bank;
- net commission income (-€8.5 million to €33.6 million) was affected by a decrease in the
component relating to lending, attributable to both a slowdown in the growth of assets
recorded in the last part of the year and the contraction already mentioned in the operating
scope regarding corporate lending activity;
- net income from trading hedging and disposal/repurchase activity was €15.3 million (+€1.3
million), the aggregate result on the one hand of a decrease in trading activities (-€6 million
of which -€6.5 million on transactions on interest rates connected with derivatives to hedge
own liabilities) and on the other of an overall increase in hedging and disposal and
repurchase activity (+€7.3 million) relating largely to gains on the unwinding of hedges
regarding repurchases of own securities;
- other net operating income and expense totalled €2 million (-€3.4 million) and included the
recovery of legal costs of €1.6 million incurred by the Bank.
Within operating expenses, personnel expense fell to €31.3 million (-€1.6 million) as a result of
a decrease in average personnel numbers and lower fees paid to directors, while other
administrative expenses fell to €19.5 million (-€1.5 million), due mainly to lower services costs
and IT expenses, which benefited from economies of scale and from the renegotiation of Group
contracts.
As a result of the performance described above, the cost:income ratio increased to 37.4% from
33.7% at the end of 2010.
Net impairment losses on loans, amounting to €60.4 million, an improvement compared to
€65.4 million the year before, the aggregate result of a substantial decrease in specific net
impairment losses (down to €45.4 million from €68.3 million in 2010) and an increase in
collective impairment losses on loans (€15 million compared to reversals of €2.9 million before)
in relation to changes in methodologies and not to a deterioration in the quality of performing
loans.
Net provisions for risks and charges also decreased to €1 million (-€6.7 million) and related
mainly to a single case of current litigation.
Finally, pre-tax profit was affected by the full write-off of goodwill already mentioned,
amounting to €7.2 million, following impairment tests.
As concerns the balance sheet, loans to customers amounted to €7.2 billion, slightly down
compared to €7 billion in 2010 (+2.7%). In terms of type of business, both corporate lending
(+3.7%) and Acquisition & Project Finance (+5.5%) increased, while corporate finance
decreased (-15.1%).
Affected, amongst other things, by the trend in investments in the second half of the year, a
decrease in loans approved was recorded in 2011 (-32.4% to €2.3 billion). New loans (-12.3% to
€1.9 billion) were affected on the one hand by the change in the operating scope of
Centrobanca and on the other by a policy of growth in assets targeted on “core” clients, with
non financial companies again the main recipients.
Total net deteriorated loans rose over twelve months to €523.2 million (+€85.4 million;
+19.5%), but were accompanied, nevertheless, by a change in the composition as follows: nonperforming
loans increased to €106.1 million (+€24.9 million), mainly as a result of transfers
from impaired loans; impaired loans increased to €251.9 million (+€107.8 million), due
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