UBI Banca Group

- the net result for financial activities was again an overall loss of €10.6 million (a loss of €24
million in 2010), the result of an improvement in the trading component (due to the
unwinding of derivatives positions), notwithstanding a worsening of the hedge component.
Profits of €2.1 million were also earned on disposals and repurchases, following the disposal
of unsecured non-performing loans concluded during the year;
- other net operating income and expense increased to €36.2 million (+€6.4 million),
benefiting from increased income from securitisations.
Operating expenses, which remained almost unchanged over twelve months, included a fall in
personnel expense (-€0.7 million to €12.3 million), due, amongst other things, to a reduction in
personnel numbers, which was fully offset by an increase in other administrative expenses
(+€0.7 million to €46.6 million), attributable mainly to higher expenses for outsourced IT
services and consulting services in connection with the IT migration project and the merger of
B@nca 24-7 into the Parent.
Although still high, net impairment losses on loans fell by approximately 30%, benefiting from
action taken to contain risks, which took the form of the progressive discontinuation of the
SILF network of agents and indirect networks (i.e. Ktesios Spa 11 ), with the concentration, at
the same time, of new salary backed loans in the subsidiary Prestitalia Spa.
Similarly, provisions for risks and charges in relation to possible operating risks connected
with salary backed lending and personal loan business, decreased by €1 million to €7.9
million 12 .
Pre-tax profit of €32.1 million recorded significant growth compared to €6 million at the end of
2010. However, tax expense of €13.8 million was particularly high, due to the limits on the
deductibility of impairment losses on loans and to the increase in the rate for IRAP (local
production tax), despite the benefits resulting from the disposals of loans concluded during the
year.
As concerns the balance sheet, the difficult economic context and the strategic reorganisation
activity affected total outstanding loans, which fell to €10.5 billion (-€0.7 billion; -6.3%), the
aggregate result of a general reduction in all types of lending, which was greater for non
captive loans brokered by SILF (down from 9.7% to 6.3% of the total) and for captive loans
originated through Group branches (down from 15.9% to 15.6%). While the total amounts fell
slightly, an increase as a percentage of the total was recorded for salary backed loans 13 (up
from 27.7% to 29.2%) and mortgages 14 (up from 45.9% to 48%). On the other hand, the
remaining types of lending were practically unchanged (up from 0.8% to 0.9%).
Total new loans disbursed almost halved, down to €1.5 billion from €2.7 billion in 2010. These
were composed as follows: €0.6 billion of salary backed loans brokered by the subsidiary
Prestitalia and indirect networks (-44.7%); approximately €0.6 billion of personal and special
purpose loans distributed through the network banks (-12%) and the SILF distribution
network (-37.8%); €0.3 billion of mortgages (-66%), brokered principally through the BY YOU
network before the transfer of new disbursements to the network banks.
At the end of the year total active cards issued by B@nca 24-7 to Group customers (net of
cards being replaced) had reached €551 thousand (+9.1% compared to €505 thousand at the
end of 2010), with a significant increase in the total value of the transactions performed (+€0.3
billion to €1.8 billion; +21.3%).
Over the twelve month period, net deteriorated assets increased from €269.3 million to €403.9
million (+50%) as follows: net non-performing loans 15 rose from €173.7 million to €229.2
million (+32%) and net impaired loans rose from €73.1 million to €110.1 million (+50.7%),
while exposures past due and in arrears – which included an increase in positions relating to
11 Losses on loans recognised in the financial statements in relation to the Ktesios Group amounted to €19.4 million, including €11.4
million recognised through profit and loss in 2011 and €8 million resulting from the reclassification of a previous provision for risks
and charges made in the fourth quarter of 2010.
12 The figure includes a total of €3.6 million relating to the Ktesios Group.
13 As at 31 st December 2011, salary backed loans brokered through the Ktesios Group amounted to €883 million.
14 Following a revision of the Group arrangements with the BY YOU network, activity to disburse new mortgages was transferred
directly to the network banks on 18 th May 2011, leaving the management of outstanding mortgages only to the Bank.
15 In 2011 the Bank performed two disposals of unsecured non-performing loans for a total gross amount of €151.6 million, which had
been written down almost entirely: €58.5 million in June and €93.1 million in December.
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