One Bank, One UniCredit Capital Markets · PDF fileOne Bank, One UniCredit Capital Markets Day. ... for details see Annex slide 19 and 20 2. ... Increased dematerialisation process

London, 12 December 2017

One Bank, One UniCredit Capital Markets Day

Agenda

1

Q&A session

Breakfast & Registration

Transform Operating Model and Maximize Commercial Bank Value

Transform 2019

Q&A session

Commercial Banking Italy

Improve Asset Quality

CFO Presentation

Coffee Break

Topic

J.P. Mustier

Closing remarks

Lunch

Q&A session

Speaker

G.F. Papa

A. Casini / G. Ronca

T.J. Lim

M. Bianchi

J.P. Mustier

Time

9.00

8.00

11.10

11.30

13.30


J. P. Mustier

One Bank, One UniCredit Transform 2019

Transform 2019: key targets confirmed with an improved risk profile (1/2)

A simple successful Pan European Commercial Bank, with a fully plugged in CIB, delivering

a unique Western, Central and Eastern European network to its extensive client franchise

Transform 2019 fully on track yielding tangible results underpinned by group-wide business momentum

2019 key targets confirmed

2

2019 key targets confirmed, RoTE target >9%

2019 fully loaded CET1 ratio confirmed >12.5%

FY19 dividend1 payout increased from 20% to 30%

Self-funded full rundown of Non Core by 2025

1. To be paid in 2020

Post 2019 dividend payout to increase from 30% up to 50%

once upcoming regulatory impacts are confirmed

3


One Bank, One UniCredit Transform 2019 fully on track

Strong commercial

dynamics thanks to network

revamp

Additional NPE

rundown

Confirm capital target whilst

increasing dividend payout

1. Of which: Non Core down by 2.0bn from 19.2bn to 17.2bn and Group Core down by 2.0bn from 25.1bn to 23.1bn 2. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 3. To be paid in 2020 Note: CET1 ratio fully loaded and data in Euro throughout the document unless otherwise stated

• FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18

• Group gross NPEs down by a further 4.0bn1 by end 2019, better than initial Transform 2019 target

• Self-funded full rundown of Non Core by 2025

• 2019 revenues confirmed: higher relative contribution of fees and commissions

• 2019 costs confirmed: higher HR savings allowing for additional IT Investments

• 2019 RoTE target confirmed at >9%

• SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps from 2019

• 2019 fully loaded CET1 ratio target confirmed >12.5% including partial anticipation of regulatory headwinds

• Post 2019, annual CET1 ratio2 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds

• FY193 dividend payout increased from 20% to 30% thanks to a solid capital position

• Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed

4

improved

-0.21

+0.21

+6bps1

unchanged

unchanged

unchanged

unchanged

unchanged

2019 key targets confirmed RoTE target >9% and further 4.0bn reduction of NPEs

Net Income and RoTE confirmed

9M17

FY17 Guidance

LLP -1.8

Net Income 3.02

Cost <-11.7

Revenues 14.8

-2.6

2019

4.7

-10.6

20.6

1. Line adjustment due to accounting changes, for details see Annex slide 19 and 20. Increase of revenues only impacts NII and it is compensated by LLP increase which mechanically impacts cost of risk 2. Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao and Pioneer disposals as at 1 January 2017

Cost of risk 54bps

Cost/income 57.9%

RoTE 8%2

CET1 ratio 13.8%

Gross NPE stock 51.3

55bps

<52%

>9%

>12.5%

40.3 down by 4.0bn from 44.3bn

Line adjustment1 €bn, unless otherwise stated

5

One Bank, One UniCredit The five pillars

5 STRATEGIC PILLARS

TRANSFORM

OPERATING MODEL

ADOPT LEAN

BUT STEERING CENTRE

STRENGTHEN AND OPTIMISE CAPITAL

MAXIMISE

COMMERCIAL BANK VALUE

IMPROVE

ASSET QUALITY

ONE BANK ONE

6

• Fees expected to reach 7.1bn as a result of higher AuM

• Reduction of NII of 0.1bn:

− U-shaped vs. V-shaped Net interest income evolution between 2017 and 2019

− loan volumes revised lower by 11bn to 444bn2

− lower cost of funding thanks to decreased issuance and lower rates

• Customer rates bottoming out in the second half of 2018

1. Including line adjustment from accounting changes, for details see Annex slide 19 and 20

2. Net loans excluding repos

Comments

€bn

Revenues1 mix evolution

2019 target confirmed

2019

20.6

11.0

7.1

2.5

2015

20.4

11.5

6.5

2.4

NII Fees & Commissions Trading Income, Dividends and Other

Previously: • 7.0bn on Fees

and Commissions

• 11.1bn on NII

Transform operating model Overall revenues target confirmed: higher relative contribution of fees and commissions

7

12.2

10.6 -1.2

-0.5

2015 HR savings Non-HRsavings

2019

3,809

3,127 2,865

2015 2017 2019

Transform operating model Cost target confirmed, FTE and branch reductions ahead of schedule

Group costs, €bn Branches in Western Europe

Cost savings Branch reduction in

Western Europe1

• Decrease in costs on track with Transform 2019

• Higher HR savings allowing for additional IT Investments

Group FTE, '000

FTE reduction

• FTE reductions ahead of Transform 2019 schedule, 51% as of 9M17

• 7,232 net redundancies as of 9M17 and over 1,300 planned for 4Q17

• Additional 121 branch closures in Italy realised in 4Q172

• 266 further closures planned between 2018 and 2019

1. Retail branches 2. Already done as of November 17 Note: Numbers might not add up due to rounding

101 <93 87

2015 2017 2019

-14


-1.7 -944

>59% to be achieved

by end 2017 72% achieved as of November 17

8

Transform operating model Digital and IT transformation on track

Phased-in release of new applications to minimise operational risk

November 2017 New Core Banking system first release

Evolution of Core Banking system

Ongoing program including rationalisation and simplification

Set-up of first proprietary cloud infrastructure

Infrastructure transformation

Decommissioning - 830 applications closures (ca. 75% versus target 2019)

Global application to replace local ones

Reduction of IT complexity

IT achievement

New multi-country online and mobile banking platforms

New Corporate Portal in Italy, Germany and Austria

First bank in Italy to launch payments via Apple Pay and to introduce Alipay

3x faster procedure for current account opening, with increased number of risk controls

Increased dematerialisation process

Launched fully remote card management on Internet and mobile banking

Innovative distribution

channels

End-to-End1: simplification and improvement of key processes

Improved customer experience thanks to digital transformation

1. End-to-End process launched for Commercial Banking Italy, planned expansion to include Commercial Banking Germany and central functions

9

Operating Costs1

Maximise Commercial Bank Value Western Europe transformation progress resulting in higher productivity

1. Delta between 9M16 and 9M17 2. Stated figures, allocated capital calculated as 12.5% of RWA 3. Allocated capital calculated as 12.5% of RWA; normalised RoAC. 9M16 for capital gain on Visa disposal; 9M17 for a capital gain on disposal in 3Q17 and a release of a tax provision in 2Q17 4. Allocated capital calculated as 12.5% of RWA; normalised RoAC. 9M16 for DBO integration costs and others items; 9M17 for real estate disposals and tax effects

Commercial Banking Italy Commercial Banking Austria Commercial Banking Germany

Actions implemented

• New service model for SME client segment

• Closer CIB-Commercial banking collaboration

Actions implemented

• New Retail service model

• Focus on cross-selling

-3.1%

Fees and Commissions1 +9.7%

9

-1

9M17 9M16

9M17

8.2

9M16

6.3

Cost of Risk, bps RoAC3, %

+1.9

Actions implemented

• Multichannel approach

• New service model for Affluent and SME clients

Operating Costs1 -3.2%


70 66

9M16 9M17 9M17

11.7

9M16

10.4


-3 +1.3

Operating Costs1 -11.9%



-12 +11.3

-19-8

9M17 9M16

9M17

6.0

17.3

9M16

+10

10

Maximise Commercial Bank Value CEE and CIB confirming leadership positions

Operating costs1

CEE CIB

-4.6%

Client driven revenues1 +0.9p.p.

20 15

9M17 9M16 9M17

14.5 15.1

9M16


-5 +0.6

Net new clients2 +10%


13.5

9M17 9M16

14.4


-15 +0.9

Further strengthened leadership position

#1 in terms of total assets4

Confirmed market leadership

#2 in Loan and Bonds5

1. Delta between 9M16 and 9M17, for CEE at constant FX 2. Delta between 2015 and 9M17 3. Stated figures, Allocated Capital calculated as 12.5% of RWA, CEE at current FX

109 94

9M16 9M17

11

4. Based on total assets compared to Erste, Intesa Sanpaolo, KBC, OTP, RBI, Société Générale, ranking as of 1H17 5. Combined Loans and Bonds – EMEA All borrowers (EUR denominated) as of 9M17

Strengthen and optimise capital 2019 CET1 ratio target confirmed whilst anticipating additional regulatory headwinds

12

Fully loaded CET1 ratio, %

1. Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1st January 2018 3. Partial anticipation impacts include EBA guidelines related effect and other minor adjustments

Regulation, models and procyclicality

IFRS92

EBA guidelines (anticipation) etc.3

Organic Capital Generation4 +0.4 +0.5

-0.3 -0.4 -0.1

-0.4

-0.8

>13.04,5 12.2/12.7 >12.5 13.8

Fully loaded CET1 ratio evolution to 2019, %

Dividend payout 20% 20% 30%

-0.31 Confirmed expected

regulatory impacts of -1.5

9M17 4Q17 2018 2019

Total CET1 impact, % -0.8 +0.3 -0.7

%

4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit 5. Pro-forma for IFRS9

-0.1

% of cumulative phase-in

EBA guidelines (remaining)

Calendar provisioning2

FRTB3

Basel IV4

Estimated CET1 impact, %

< -0.9

-0.4

-0.1

-0.9

Estimated CET1 impact, % 2020 2021 2022 2023

20% 100%

13% 37% 54%

20% 40%

2024 2025

60%

66%

80%

86%

100%

< -0.8 -0.3 -0.2 -0.3 -0.3 -0.2

up to 2027

100%

100%

-0.2

65% 65%

1. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 2. Conservative approach based on ECB proposal has been used 3. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in 2024 4. Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 5. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout

Cumulative net CET1 impact including organic capital generation5, %

< +0.1 +0.3 +0.5 +0.7 +1.0 +0.3 > +1.7

Regulatory Headwinds post 2019 – CET1 ratio impact (managerial estimates)

Strengthen and optimise capital - Post 2019 annual CET1 ratio1 >12.5% thanks to

organic capital generation fully absorbing expected regulatory headwinds

13

Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio1 >12.5%

Improve asset quality Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target

Gross NPEs ratio3, %

NPEs Coverage ratio, %

Group Core – NPEs evolution1

5.8

49.6

CoR, bps 42

Gross NPEs, €bn

5.0

55.7

38

4.7

>51

434

NPE

Non Core evolution1

Gross loans, €bn

29.5

53.5

Net loans2, €bn


15.6

57.1

7.4

>57


Performing

2.0bn better than previous target of

25.1bn

2019

23.1

10.8

11.0

1.4

9M17

22.5

11.2

10.0

1.2

9M16

25.2

13.0

10.7

1.5

Bad Loan

UTP

PD

2025 2022

7.1

2019

17.2

9M17

28.8

9M16

56.3

6.7

49.6

0

397 405 437 Net Loans2, €bn

1. For 9M16 and 9M17 stated figure 2. Excluding intercompany and repos 3. Calculated as: Gross NPEs / Gross Loans including intercompany and repos 14

4. Includes line adjustment, previously 45bps 5. Closing expected in 1Q18

2.0bn better than previous

target of 19.2bn

FINO phase 2 signed5

32.5 3.7

Corporate governance in line with best in class European companies with simplified share capital structure

Empowerment of Board of Directors to present its own list of candidates

Reduction of board members from 17 to 151 of which two appointed from the minority list

Removal of 5 per cent limit of voting rights2

Conversion of saving shares into ordinary shares

Delisting from trading of ordinary shares on Warsaw Stock Exchange3

1. On December 2016 Board of Directors approved to disclose a recommendation for Shareholders to consider the reduction of Board members for next Board renewal in 2018 2. Subject to condition ("stop loss clause"): in case the exercised withdrawal rights exceeds 0.25% of the Bank's share capital (equal to approximately Euro 98m) Bylaws will not be amended, unless Board of Directors waives such condition 3. Ongoing

Adopt lean but steering Centre Strengthened corporate governance

15

40.3

17.7

7.8

down by 0.6 from 8.4


FY19 dividend3 payout increased from 20% to 30%, post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio >12.5%

2015 9M17

Revenues, €bn

Cost, €bn

RoTE, %

CET1 ratio, %

Gross NPE, €bn

Gross NPE ratio, %

2019

-12.2

4

10.4

77.8

16.0

<-11.7

82

13.8

51.3

10.6

-10.6

>9

>12.5

20.61

FY17 guidance

Cost of Risk, bps 1031 54 551

Net Income, €bn 1.5 4.7

Cost/Income, % 60.01 57.9 <521

1. Including line adjustment due to accounting changes, for details see Annex slide 19 and 20 2. Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao & Pioneer disposals as at 1 January 2017 3. To be paid in 2020

20.41

Net NPE, €bn 38.3 22.3

down by 4.0bn from 44.3bn


16

Transform 2019 fully on track underpinned by group-wide business momentum

2019 key targets confirmed: RoTE >9%, fully loaded CET1 ratio confirmed >12.5% and improved risk profile

FY19 dividend1 payout increased from 20% to 30%

Post 2019, organic capital generation fully absorbs expected regulatory headwinds

1. To be paid in 2020


Conclusion

17

Q&A session


One Bank, One UniCredit Transform 2019 Transform Operating Model and Maximise Commercial Bank Value G.F. Papa


2

5 STRATEGIC PILLARS

ONE BANK ONE

TRANSFORM

OPERATING MODEL

ADOPT LEAN

BUT STEERING CENTRE


MAXIMISE


IMPROVE

ASSET QUALITY

One Bank, One UniCredit A simple successful Pan European Commercial Bank with a fully plugged-in CIB

3

Positioning UniCredit as a Pan European winner


"One Bank, One UniCredit" approach to maximise synergies

Strong commercial dynamics thanks to network revamp

Pragmatic approach to digital to support Transform 2019

One Bank, One UniCredit Snapshot of our successful business

4

Focused

14 o/w 12 in EU4

Pan-European but local

Corporate lender in EU12 million clients Retail branches Scale

Commercial bank1

% of total revenues – 9M17 EU – based2

% of total revenues 9M17

Market position5 Countries with banking operations

Source: Dealogic, Euromoney 2017, Global Finance, OeNB

66% 94%

Peer Av.3

61% 81%

Peer Av.3

#1 74%

Distinctive factories

GTB powerhouse Syndicated Lending in

core countries Client driven CIB

revenues11 Lending CMIB7

#2 Loans and Bonds10 ITA #1 GER #1 AUT #1 CEE#2

All Syndicated Loans9

Best Bank in Cash Management Trade Finance Provider in Western Europe and CEE8

ITA #2 GER #3 AUT #1 CEE #16

Data updated as of 9M17

UniCredit UniCredit

2nd 2513 4,97513

5. Based on Total Assets 9M17. For Austria domestic assets as of end of 2015 on local GAAP (source OeNB). For Germany considering private banks 6. Based on total assets. Compared to Erste, Intesa Sanpaolo, KBC, OTP, RBI, Société Générale, ranking as of 1H17 7. Capital Markets and Investment Banking, 9M17 8. Euromoney Cash management Survey, 2017 and Euromoney Cash Management Survey 2017 9. All Syndicated Loans, Home Countries League Tables (all curr.) 9M17 10. Combined Loans and Bonds – EMEA All borrowers (EUR denominated) 9M17 11. CIB revenues excluding Treasury 9M17 12. Peers include: BNP Paribas, Intesa Sanpaolo, Santander, Société Générale, Deutsche Bank 13. Including 100% clients and branches in Turkey; 9M17, excluding Fineco

1. CBK Italy, CBK Germany, CBK Austria, CEE as percentage of Group Revenues; 9M17 2. UniCredit excludes Turkey and Russia with a pro-quota approach; BNP Paribas data at FY16 and Société Générale data calculated as of proxy of loans at geographical level; 9M17 3. Peers include: BNP Paribas, Intesa Sanpaolo, Santander and BBVA (only for geographical breakdown), Société Générale 4. Italy, Germany, Austria, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Bosnia and Herz., Serbia, Russia, Romania, Bulgaria, Turkey

Business momentum and dynamic commercial performance

5

2019

444

436

8

9M17

412

394

18

9M16

416

385

31

2015

409

372

37

-6.0%

2019

11.0

9M17

8.0

9M16

8.5

2015

11.5

Net Interest Income1 Loans2

€bn

+5.5%

2019

7.1

9M17

5.0

9M16

4.8

2015

6.5

Loans volume, Group, €bn

Fees and Commissions

€bn

• NII commercial dynamics supported by lower cost of funding

• Compression of customer spread mainly due to persistently low interest rates

• Loan volumes of Business Divisions increased by 8.5bn in last twelve months

• Continuous improvement of the portfolio quality

• Investment fees up 12.4% 9M16/9M17 thanks to higher AuM and TFAs

• Increased transactional fees (+7.4% 9M16/9M17) supported by strong GTB performance

Business Divisions

GCC & Non Core

1. Including line adjustments due to accounting changes (see Annex, slides 32-35 for additional details). Stated NII: 10.9bn in 2015, 7.9bn in 9M16, 7.7bn in 9M17 2. Excluding Repos; including line adjustments due to accounting changes (see Annex, slides 32-35 for additional details). Stated Loans: 418bn in 2015, 426bn in 9M16, 421bn in 9M17

Commercial Banking Italy Transformation of operating model fully on track

6

Business achievements Efficiency improvement

52.6 60.5 59.7 60.0

2019

12.9

9M17

11.7

9M16

10.4

2015

6.9

• Strong focus on AuM sales

• Increasing Consumer Finance

• Strict risk discipline

• New segmentation of Corporate clients

• New service models for Affluent and Small Business

• New branch formats being rolled-out

• End-to-End product processes redesign

• Focus on multichannel client approach

Improved customer

focus with a lower

cost structure

Increasing risk adjusted profitability

Cost/Income1 (%)

Branches

FTE ('000)

RoAC1 (%)

1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment; Allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA – See Annex, slides 32-35 for additional details

29.0 33.5 35.6 36.6

2,400 2,784 3,140 3,283

Commercial Banking Germany Good results supported by strong growth in all segments

7


341341342352

67.0 76.7 66.1 74.0

11.0 10.3 9.2 11.5

9M17

9.1

2019

7.6 6.3

2015 9M16

8.2

• Growing Trade Finance business

• Successful conversion of Deposits towards AuM

• Continuous growth in Retail lending

• Low CoR given high quality of portfolio

• New SME service model

• Enhanced Retail focus

• Increased CIB- Commercial Banking cooperation and cross-selling revenues

• New Bankassurance partnership with Allianz

Improved customer

focus with a lower

cost structure


Cost/Income1 (%)

Branches

FTE ('000)

RoAC1 (%)

1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment – See Annex, slides 32-35 for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA

3 2

2. Normalised RoAC for Visa sale (10m) 3. Normalised RoAC for a net capital gain on disposal in 3Q17 and in 2Q17 related to the release of a tax provision (for a total of 207m)

Commercial Banking Austria Organisation streamlined, renewed focus on premium advisory

8


63.3 70.6 74.4 78.1

4.7 5.2 5.5 5.9

124127147174

9M17 2019

19.0

9M16

17.3 13.3

2015

6.0

• Increasing new loans production maintaining portfolio asset quality

• Stronger focus on cross-selling

• Retail AuM growth driving fees increase

• Growing volumes in household lending

• Improved client satisfaction from new Retail service model

• Progress in digital transformation

Improved customer

focus with a lower

cost structure


Cost/Income1 (%)

Branches

FTE ('000)

RoAC1 (%)

1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment – See Annex, slides 32-35 for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA

3 2

2. Normalised RoAC for Visa sale (+34m) and Integration costs (-208m) 3. Normalised for non recurring items in 3Q17: real estate disposals (+65m) and tax effects (+17m) for a total of +82m

Tangible results in CEE thanks to transformation actions

9

Key achievements

Organic growth

Risk discipline

KPIs1

• NPEs reduction ahead of target, with NPE ratio down 9M16/9M17 by 140 bps

• Stable revenue generation in 9M172, in line with Transform 2019 targets: - NII stable 9M16/9M17, sustained by lower cost of funding - Fees +7%3 9M16/9M17, mainly thanks to transaction banking

• Continued client acquisition (i.e. +10% new clients 9M17 vs 2015)

Sustainable profitability

• RoAC up by 90 bps 9M16/9M175

Cost savings

• Focus on cost discipline, confirming a low C/I ratio

Gross NPEs ratio4 (%)

RoAC (%)

Cost/Income (%)

7.2 8.9 10.3 11.7

36.9 35.8 35.2 37.0

4.4

3.2 3.2

4.1

Revenues (€bn)

1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment – See Annex, slides 32-35 for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Current FX rates at +0.1% y/y and +3.8% y/y normalized for Visa sale; constant FX rate at -1.3% and +2.4% normalized for Visa sale

3. At current FX rates; constant FX rate: +4.4% 9M16/9M17 4. Excluding Turkey, Ukraine 5. +201bps normalized for Visa sale

2019

13.4

9M17

14.4

9M16

13.5

2015

9.7

Further strengthened leadership position in CEE

10

Innovation and digitalisation

• Solid growth in digital, in particular mobile +15p.p. vs. 2015

• Agile methodology in key projects

• Further progress in data management and analytics: new online tools successfully implemented

Synergies with the

Group

• Enhanced international client coverage

• Effective best practice sharing throughout CEE and Group

Footprint evolution

• Ongoing network optimisation delivering good results

Key achievements KPIs

Digital users1 (%)

o/w Mobile users1 (%)

Branch closures/relocations2 (%)

International clients ('000)

28 26

5144

4728

1412

2019 9M17 1. Including Turkey at 100%. Ratio defined as number of Retail digital/mobile users on active retail customers 2. Calculated as number of closures/relocations of branches on total number of branches vs. 2015

Confirmed CIB market leadership

11

Confirmed market

leadership

• Leading EMEA European Debt Finance House

• Consistently "Top 3" book-runner in Loans and Bonds in core markets

Key achievements KPIs

Solid commercial performance

• Client driven revenues boosted by strong commercial activity

• CIB-Commercial Banking cross-selling driven by effective initiatives in cross-division and cross-border business

Continuous cost discipline

and simplification

• Ongoing streamlining of businesses and operating platform resulting in reduced costs

• Continuous cost discipline to reach 2019 C/I target

League Tables Combined Loans and Bonds – EMEA1

Cost Income Ratio2 (%)

9M17 2016 2015 2014 2013 2012

73

2015

67 74 83

9M16 2019 9M17

Client Driven Revenues (%)

2019

39.6 44.7

9M16

40.2

9M17

40.2

2015

#2 #2 #3 #2 #3 #2

1. All borrowers (EUR denominated) 2. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment – See Annex, slides 32-35 for additional details

• Strategic Pan-European presence in 14 European core markets

• International network spanning a further 16 countries worldwide

• Access to a network of 4,000 correspondent banks, covering ~175 countries

• Digital innovations covering the whole value chain: - Client access - Product Offering - Back-end processes - Data analytics

• Proven set of core competencies in a wide range of products: - Cash Management & E-Banking - Trade Services - Working Capital Management - Cash & Clearing Products for FIs - Global Security Services1

Client offer GTB Powerhouse Technology innovator

2017 Awards

Best Bank in Cash Management in 11 countries

Five-Star Cash Manager in Western Europe and CEE

Best Trade Finance Provider in Western Europe and CEE

GTB, a strong backbone of the Group as well as a technology innovator

12

• €1.7bn GTB revenues2 in 9M17, representing about 11% of Group total Revenues

GTB strong contributor to Group results

1. In Austria and CEE 2. In Western Europe Commercial banking, CEE Division and CIB Division

Maximise synergies across the Group

13

Group-wide best practice sharing process in place

CIB – Commercial

Banking cooperation

Corporate – HNWI/ Private/ Retail synergies

International client support

Key achievements

• Stronger managerial commitment

• Dedicated cross-selling committees to drive business and identify opportunities

• Dedicated initiatives in Italy, Germany, Austria and CEE to maximise synergies

• Optimised Product and Investment Platform

• Improved focus on CIB and International Corporate clients cross-border business

Video: interview with Delivery Hero

14

Key indicators proving tangible progress of transformation

15

Western Europe Commercial

Banking2

CIB

2019 RoAC1 (%) 9M17 9M16

€11.6bn Revenues

37 bps CoR

57.2% Cost/Income

€8.8bn

34 bps

63.1%

€8.9bn

37 bps

65.3%

2015

8.6 9.2 11.7

9M16

12.1

9M17 2019

9M17

15.1

9M16

11.7

2019

14.8 14.5

2015

KPIs1

2019 Group RoTE target is confirmed >9%

€3.9bn Revenues

21 bps CoR

40.2% Cost/Income

€3.1bn

18 bps

40.2%

€3.3bn

24 bps

39.6%

1. Figures were recasted on a like-to-like basis to consider changes in scope of business segment and line adjustment – See Annex, slides 32-35 for additional details; allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA 2. Italy, Germany and Austria, RoAC normalised for Germany and Austria as per slides 7 and 8

CEE

€4.4bn Revenues

102 bps CoR

36.9% Cost/Income

€3.2bn

97 bps

35.8%

€3.2bn

115 bps

35.2% 9.7

2019 9M17

13.5 13.4

9M16

14.4

2015

2019

10.6

9M17

8.6

9M16

8.9

2015

12.2

-1.7

Productivity increase, while significantly reducing costs, branches and FTE

16

Cost savings Branch reduction in

Western Europe1

• Decrease in costs on track with Transform 2019

• Sound 9M16/9M17 cost reduction of both HR (i.e. -4.7%) and Non-HR costs (i.e. -2.5%)

-14

2019

87

9M17

94

9M16

99

2015

101

FTE reduction

• FTE reductions ahead of Transform 2019 schedule

• 2017 target already achieved, as of 9M17 reached about 51% of 2019 target2

• Execution of branch-closures in line with plan targets

• 557 branch closures by 9M172, representing 59% of 2019 target of closures

-944

2019

2,865

9M17

3,252

9M16

3,629

2015

3,809

1. Retail branches, Italy, Germany and Austria 2. vs 2015 baseline Note: Numbers might not add due to rounding reason

Group costs, €bn Group FTE, '000 Branches in Western Europe1

IT simplification, end-to-end process redesign and new digital solutions as key enablers of productivity increase

>59% to be achieved by end 2017

72% achieved as of November

Transform 2019 progress monitoring mechanism

17

• Structured monitoring of initiatives

• Dedicated Transformation Office

• Group-wide managerial KPIs

• Periodical performance review with CEO and GM

Transform 2019 progress monitoring mechanism Actions

Transformation Jour Fixe

Pillar Steering

Committees

Objectives Frequency

• Consolidated view

• Overall coordination

• Decision making

• Steer transformation

• Problem solving

• Monthly

• Weekly/ Monthly1

Participants

• CEO and GM

• Pillar Sponsors

• Program Owners

• Pillar Sponsors

• Program Owners

• CEO and GM permanently invited

Meetings

1. Depending on Pillar and Programs

Improved risk profile thanks to a strong risk discipline

18

Underwriting

Monitoring

• Disciplined and sustainable new origination, supported by centralization and automation of credit processes

• Expected Loss on New Business KPI to ensure sound origination

• Business as first line of defense for tight portfolio monitoring

• Advanced automated early warning signals

• Expected Loss on Performing Stock KPI to observe risk dynamics

0.35% 0.38%2

9M16 9M17

Expected Loss on Performing Stock1

Gross NPEs ratio1

9M17

4.7%

2019

5.8% 5.0%

9M16

0.34%

9M2017

Expected Loss on New Business1

1. Perimeter: Group Core 2. Pro-forma including models recalibration occurred end of 2016

Digital initiatives to support Transform 2019 implementation

19

• New multi-country online and mobile banking platforms

• Retail payments innovation

• Digital sales enablement and transaction migration

• Pre-scored credit lines

• Focus on cyber-security

Ongoing initiatives

• New advanced digital and analytical tools in support of Advisors

• Increasing use of advanced data analytics

• End-to-End processes redesign and digitalisation

Digital & multichannel experience

Risk Management

Advisory services

Processes optimisation

Areas of Digital development

• Simplification of IT infrastructure and evolution towards next generation IT architecture

• Process automation and digitalisation, reducing labour-intense Back-Office activities

• Optimisation of Real Estate

• Different cost mix, with increasing reliance on IT

2015

28% 26%

2019

-14%

26%

49%

29%

43%

ICT Real Estate Operations

Cost base evolution

COO Services1 - Cost mix (%)

1. COO Services P&L included in Group Corporate Center perimeter. TCO: Total cost of ownership by Service lines: IT, RE and OPs (Back office, Procurement, Workout, Governance, Security) including related HR and NHR costs

Delta 2015-2019 (%)

-2%

-24%

-22%

Structural change of cost base driven by evolving customers behaviour and increasing digitalisation

20

IT simplification, back-office streamlining and real estate optimisation key enablers of productivity increase

21

Evolution of IT architecture

Operations efficiency

Real estate optimisation

Ongoing initiatives KPIs

• Reduction of IT complexity by decommissioning applications

• Modernization of Core Banking system

• Simplification and improvement of IT infrastructure

• Back-Office capacity enhancement

• Processes digitalisation and streamlining with E2E approach

• New organisational design and simplification of geographical presence

• Reduction of Western Europe branches1

• Optimisation of head-quarter spaces

830

2019

>1,100

9M17

Decommissioning of applications (vs 2016)

-29%

2019 2015

Back-Office FTE

Western Europe branches1

2019

2,865

9M17

3,252

9M16

3,629

2015

3,809

1.Retail branches, Italy, Germany and Austria

Full engagement and commitment

to Transform 2019

Nurture our talents

Evolve the way of working

Create opportunities

Our Human Capital as fundamental enabler of Transform 2019

22

One Bank, One UniCredit A simple successful Pan European Commercial Bank with a fully plugged-in CIB

23

Positioning UniCredit as a Pan European winner


"One Bank, One UniCredit" approach to maximise synergies


Pragmatic approach to digital to support Transform 2019

One Bank, One UniCredit Transform 2019 Commercial Banking Italy A. Casini – G. Ronca


Transformation of operating model fully on track

2


Transform 2019 fully on track, yielding tangible results

Focus on multichannel client approach, leveraging on all interaction points

Strict risk discipline on new loan origination and tight risk monitoring

Improved customer focus with a lower cost structure

% increase of online transaction6

Domestic credit to private sector3 (% of GDP)

Household saving rate5

Internet users penetration7 Enterprises in Italy4

Export of goods and services (% of GDP)3

Manufacturing economy in Europe2

2017 Real GDP expected growth1

Economic landscape Italy open for business

3

+1.6%

~5.7m

#2

1. UCG Assumptions 2. World Bank - Manufacturing GDP per capita 3. World Bank 4. Ce.Bi

~30%

62%

~86%

~10%

+17%

5. ISTAT 6. MIP/Osservatori.Net 7. Audiweb powered by Nielsen

Key business priorities and achievements Retail commercial performance mainly driven by productivity increase

4

1. Including new products 2. Includes Retail, Corporate, Private, Wealth Management, CC local, Leasing and Factoring 3. Recasted data 4. Leveraging on pre-approved loans, new acquisition initiatives (jointly launched by Risk and Business divisions) and dedicated IT tools (e.g. CRM tool for Small Business) 5. Consumer Finance and Small Business. CAGR relates to stock.

Strengthen asset

gathering

Reaffirm leading

position in Retail

lending

• Expanded product offer also thanks to the partnership

Pioneer-Amundi1

• Growth in AUM and its share of TFA

• Robust new production of Consumer Finance, improving

the quality of origination

• Increased share of wallet in Small Business4

• Improving market share in residential mortgages new

business6 from 8.7% in Dec16 to 11.7% in Sep17

Evolution 2017 key highlights

72.3

CAGR: +2.5%

2019

80.0

9M2017

74.4

9M2016

74.8

20153

CF&SB5

• Strong increase in FTE productivity, accelerating in 2017

• Productivity gains driven both by optimised salesforce and

increase in total banking sales

Productivity

33% 34% 36% 41%

AuM2, €bn

AuM/ TFA

Retail loan stock, €bn

CAGR 15-19: +5.8%

Sales per FTE7, Index

Net Sales 9M2017: 8.1€bn

123.2

2019 9M2016

148.1

9M2017

114.4

20153

110.7

119

2016 20178

100

2015

108

6. Source: ABI 7. Ratio between number of Banking sales and FTE dedicated to sales activities. Banking sales are: current accounts, "Genius" cards, pre-paid cards, credit cards (Flexia), credit cards (Flexia) instalments and switch, overdrafts, personal loans, mortgages, "fast credit", enterprises loans, salary loans, saving & term deposit, AUM, insurance, P&C insurance, CPI, car insurance (new emissions and renewals), debit cards, POS, App Mobile and Online Banking 8. Figures relates to annualised data for 9M2017

Key business priorities and achievements The new Corporate model delivering tangible results

5

1. Corporate loans excluding leasing 2. As of November 2017 3. Includes revenues from structured financing, Markets, DCM, ECM, M&A

Become go-to bank for

customers

• Sustained new origination with consolidated risk discipline

• CIB "fully plugged-in" (e.g., F&A, Joint Venture) and

synergies between Retail, Private and Wealth Management

• Focus on cross-border business - new international

accounts increased by 11% Y/Y2

• Coordinated commercial activities - increased pitch

intensity, joint targeting, joint business meetings

Transform operating

model

• Network specialisation (Corporate and Retail) coupled with

organisation delayering (minus 1 layer)

• New clients segmentation in place

417

228208245

9M2017 2015 9M2016 2019

Boost Cross-selling


2015

7.2

9M2016

4.7

9M2017

5.9

2019

8.5 MLT new loans1, €bn

Revenues from F&A and JV3, €m

Sales channels

Key business priorities and achievements Transformation of operating model fully on track

6


• Rationalisation 2017 completed: - 391 branch closures in 2017 (o/w 121 in 4Q173) - Ca. 620 branch closures since 2015 (70% of 2019

target) 2015

3,283

9M2016

3,140

2019

2,400

9M2017

2,784

• Migration program 2017 on track: - Revised branch formats to increase automated

transactions4 on basic services - Reduction of in-branch transactions on track (-15%

9M/9M)

95.0%

2019 9M2017

88.0% 89.7%

2015

91.4%

9M2016

Day-to-day Banking

Retail Branch network, #

Automated transactions4, % of total

FTEs

• Reduction of FTEs ongoing: - Ca. 2,700 net exits in 20171 (o/w ca. 1,000 in 4Q17) - Ca. 4,000 net exits since 20152 (more than 50% of 2019

target) - FTE re-training program, moving staff from back office to

front office roles and new junior hirings 9M2016

33.5

9M2017 2019

29.0 36.6 35.6

2015

Evolution of FTEs , #, '000

1. Exits are fully provisioned 2. Including approximately 1,000 exits in 4Q17 3. Already completed by the end of November 2017 4. Includes cash withdrawals, cash deposits and transfers

Business Centre

Multichannel strategy Innovative redesign of branches

7

CASH-LESS Branch

FULL SERVICE Branch

SMART Branch

Fully automated branches:

• Basic products and remote advisory services

• Transactions provided by ATMs, no teller available

Partially automated branches:

• All products and simplified advisory services

• Transactions provided by advanced ATMs (Casse

Veloci), no teller available

Branches with 360° service:

• All products and specialised advisory services

• Transactions provided both by teller and advanced

ATMs (Casse Veloci) New centres fully dedicated

to Small Business customers

Branch formats Description 2019 target #

branches

1,600

400

400

All products and

services available

Dedicated coverage

for specific sector/

customer segments

Multichannel strategy Foster digital adoption

8

Solid increase of

internet &

mobile users

New digital

processes

Move to digital

transactions

• New Internet Banking, GIMB

• New Wallet solution for mobile payments

• Digital signature

• SMS/token signature

• Supported by branch automation

• Growing number of digitally enabled transactions

Continuous improvement of seamless multichannel customer approach

20171 online banking user

20171 mobile banking user

+6%2

+18%2

1. Data as of September 30th 2017 2. Increase 9M2016 – 9M2017 3. Equal to 130 million of pages 4. Data as of November 15th 2017

digitalised contracts (7,5 million contracts3) since launch in 2015

3M

1.6M

38%

# of currently installed "Casse Veloci"4 900

faster migration speed for branches with "Cassa Veloce"

2x

More products available on digital platform

Strong growth of remote sales

Multichannel strategy Reinforcing leadership in remote sales

9

Weight on total sales

206

148

100

9M2016 9M2017 2015

Index, 2015 = 100

9% 17% 19%

Number of remote sales Remote sales increase 9M/9M +40%

Pre-approved lending solutions 9M/9M +34%

Property & Casualty bancassurance products 9M/9M

+78%

Pre-approved lending solutions on "credit revolution1" platform (5 product categories) for Retail customers

NEW

Robo for Advisory process (leveraging on internal best practices)

NEW

SME loans offering, leveraging on credit revolution1 approach (pre-approved credit)

NEW

1. Credit Revolution is a Program within Risk division mainly aiming at: a) simplifying credit process and products and b) rationalizing IT architecture and platforms.

Video on Multichannel strategy

10

Open mindset

Fast delivery

No-frills approach

Agile methodology

End-to-End Delivery Unit to optimise internal processes and enhance customer satisfaction

11

Teams organised in "rooms", each focusing on a different

product/ process

Cross-functional teams including Business, IT and

other relevant Departments1

Idea generation workshops to merge business priorities

and customer feedback

1. E.g. Risk, Legal, Compliance, Processes, HR

E2E Delivery unit Guiding principles Expected benefits/goals

Increased efficiency – More than 450 FTE efficiencies in 2017

Speed to open a current account – 3 times faster (thus improving satisfaction of customers)

Self Service for Credit Card – Full remote card management on Internet and Mobile Banking 24/7

Sustainability of solutions with specific focus on risk – Increased number of automated risk controls for current account opening from 0 to 7

>450 FTEs

3x

100%

SMEs as the backbone of the Italian ecosystem

12

46%

100%

22%

12%

19%

GDP2

Medium

Large

Small

Micro

Size3

1. Includes individual enterprises and VAT numbers 2. Based on value added distribution

5.7 million enterprises1

Strong cross-selling potential within improving Italian economic scenario

97%

2%

Companies

0.1%

0.5%

Italian non-financial enterprises Key client drivers

Internationalisation and access to foreign markets

Digital innovation and technology investments

Generational handover, "managerialisation", industry knowledge and networking

Access to Capital Markets: Equity/ Debt for growth acceleration

3. Based on the European Commission categorization, accounting for a combination of employee number, turnover and total assets –respectively: <10 and ≤2m or ≤2m for Micro, <50 and ≤10m or ≤10m for Small, <250 and ≤50m or ≤43m for Medium, ≥250 or >50m and >43m for Large Source: Ce.Bi. 2017, 2015 data, UniCredit analysis

Video: Rainbow – an Italian growth story

13

New segments in place

New segments in place to enhance commercial targeting…

14

• CIB platform fully plugged-in with competitive service model Cost/ Income

• Simplified solutions to match basic client needs

• Digital platforms and best practice sharing with Small Business

• Commercial targeting based on key client needs

• Modular approach by industry, size and specific demands

Large

Top

Mid

1. Or local subsidiary of international clients 2. Or clients with complex needs based on actual and potential revenues, number of products, cross-border propensity and risk/return profile 3. Or clients with basic needs; 4. Small Business consolidated in Retail segment

• Dedicated Business Centers

• Remote advisory for basic banking needs Small

Business4

Real Estate

Public Sector

Dedicated service models Industry verticals

~ 1k Groups

>€350m turnover1

~ 8k Groups

>€25m turnover2

~ 16k Groups

>€5m turnover3

~ 660k Clients

<€5m turnover

~ 400 groups

~ 3k groups

… enabled by a new digital infrastructure

15

• Digital workbench with advanced data analytics

• Commercial targeting for lead generation

• Integrated access to product platforms

• Mobile sales productivity and enhanced advisory

• Cross-border capabilities

• Online portal for Large corporates with specialised tools for complex products

• Simple online "environment" for SMEs with value-added/ non-banking services

• Industrialised operations through automation, digital tools and analytics

• Multichannel experience

− Digital document exchange

− Multiple signature collection with mobile digital signature

Online banking platforms by segment

Digitalised operations The data ecosystem

Real time access to massive amount of internally available

data, across all segments

Innovate through CIB & Retail Banking digital platforms

evolution

Integrate advanced analytics into every function and process,

across all segments

Disciplined risk approach to underwriting and monitoring

16

• Network focused on investment grade classes

• Increased number of preapproved customers eligible for

lending

• Improved screening of watch list portfolio and evolution of

risk alerting systems for Network

Actions Evolution

Default rate1, %

1. CBK Italy, including Leasing and Factoring

2. Recalculated on the bases of forecasted volumes

• Due to seasonal effects, we expect Gross NPEs to slightly

increase in CBK Italy in 4Q 2017

• We confirm 2019 NPE targets

Gross NPE ratio, %

2019

5.42

9M2017

6.7

9M2016

6.4

2015

2.0

3.0

2019 9M2017

2.0

9M2016

2.5

Transformation of operating model fully on track

17


Transform 2019 fully on track, yielding tangible results

Focus on multichannel client approach, leveraging on all interaction points

Strict risk discipline on new loan origination and tight risk monitoring

Improved customer focus with a lower cost structure

Q&A session

One Bank, One UniCredit Transform 2019 Improve Group Asset Quality T.J. Lim



5 STRATEGIC PILLARS

ONE BANK ONE

TRANSFORM

OPERATING MODEL

ADOPT LEAN

BUT STEERING CENTRE


MAXIMISE


IMPROVE

ASSET QUALITY

2

Decisive actions to improve Group asset quality

Improved asset quality in 2017 thanks to proactive actions on stock and disciplined origination

9M17 Group CoR at 54bps, 23bps lower than in 9M16 thanks to strict risk management and write-backs

Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target

FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18


Note: Throughout the document numbers might not add due to rounding reasons, 9M16 figures restated assuming new Group perimeter, for 9M17 figures are stated

3

Transparency on expected impacts of regulatory headwinds, both on risk models and KPIs


Assumptions on regulation, models and procyclicality up to end 2019 confirmed

Solid capital position allows for a partial anticipation of EBA guidelines during Transform 2019

Proactively providing transparency and clarity on regulatory headwinds

Confirmed 2019 Group CoR target of 55bps1 even with additional impact of regulation and model changes

1. Previously 49bps; delta for line adjustments from accounting changes (see annex slide 35)

4

Asset quality

2017 asset quality improved thanks to proactive actions on stock and disciplined origination

NPEs coverage, %

0.8p.p.

4.5p.p.

Group Core

5.0% 5.8%

Group

10.6% 15.2%

• Group NPEs ratio improved significantly by dropping 4.5 p.p. to 10.6%

• Group Core NPEs ratio at 5.0% close to EBA average of 4.5%1

• Strong NPEs coverage, increasing year on year for Group by 4.3p.p. to 56.5% and for Group Core by 6.1p.p. to 55.7%

Asset quality evolution

Gross NPEs ratio, %

1. EBA Risk Dashboard - data as of 1H17 (including EU banks)

Net NPEs, €bn

9M17

9M16

52.2

35.8

49.6

12.7

Cost of Risk, bps 77 42

9M16 9M17

56.5

22.3

54

55.7

10.0

38

Bad Loans coverage, % 61.4 64.0 66.2 69.5

UTP coverage, % 34.0 34.8 44.0 42.8

9M16 9M17

Comments

5

Group Core dynamics

Net flows YTD

-30%

9M17

2.3

-1.7

4.0

9M16

3.3

-1.4

4.7

Group Core

• Significantly lower net flows to NPEs (-30%)

• Default rate decreased to 1.3%, reflecting strong underwriting and monitoring discipline

• Thanks to effective restructuring management Migration rate to Bad Loans decreased to 15.4% and Cure rate improved to 9.2%

Default rate1,% 1.6 1.3

Cure rate3, % 7.3 9.2

Migration rate2, % 20.7 15.4

1. Default rate: Inflow to NPEs on Performing stock of previous year 2. Migration rate: Inflow from UTP to Bad Loans on UTP stock of previous year 3. Cure rate: Outflow to Performing on NPEs stock of previous year

Outflow to Performing YTD

Inflow to NPEs YTD

Comments

€bn

Significant improvement across all Group asset quality metrics

6


Commercial Banking Germany

Commercial Banking Austria CEE CIB

Group Core

Expected Loss evolution confirming strong underwriting discipline

9M16 Stock

0.35 0.34

9M17 Stock

9M17 new business

0.38

9M17 new

business

0.66 0.63

9M16 Stock

0.52

9M17 Stock

Expected loss - Group Core

Expected Loss on performing stock improved by 3bps to 0.35%, Expected Loss on new business at low levels in all divisions

%

Group Core

%

9M16 Stock

0.17 0.19

9M17 Stock

9M17 new

business

0.15 0.34

9M17 Stock

9M17 new

business

0.30 0.25

9M16 Stock

0.48

9M17 Stock

0.85

0.58

9M16 Stock

9M17 new

business

9M16 Stock

0.14

9M17 Stock

0.14

9M17 new

business

0.15

1. Pro-forma including models recalibration occurred end of 2016

1

1

7

Group Core

38

42

9M17 9M16

6670

9M17 9M16

9

-1

9M17 9M16 -19

-8

9M17 9M16

94109

9M17 9M16

20 15

9M17 9M16


Commercial Banking Germany

Commercial Banking Austria

CEE CIB

Cost of Risk - Group Core

Low Group Core Cost of Risk thanks to disciplined risk management and write-backs

bps

bps

Group Core

Note: figures do not include line adjustments from accounting changes

8

NPEs deleveraging plan on track thanks to decisive actions in Non Core

57.1 NPEs coverage, % 53.5

Bad loans cov., % 64.2 60.5

UTP coverage, % 45.1 33.3

1. Excluding intercompany and repos 2. 17.7bn as of June 2016 and 17.0bn as of December 2016, thanks to recovery activities. Starting from 31 December 2016 the credit exposures belonging to the FINO portfolio were recognized in item “Non-current assets and disposal groups classified as held for sale" 3. O/w 1bn in 4Q16

Actions of Non Core run down Non Core evolution

Net Loans1, €bn 15.6 29.5

Non Core

Performing

NPE

-23.8

9M17

32.5

28.8

3.7

9M16

56.3

49.6

6.7

Gross Loans, €bn

Gross loans, €bn

Total

-1.9

-0.3

-1.3

-2.23

-23.8

"Back" to Core

Write-offs

Repayments

Recoveries

Disposals

-1.1

-17.02 FINO Disposal of bad loans

Mostly corporate

Mainly driven by corporate, small business, real estate and mortgages

Focus on retail unsecured portfolio, leasing and corporate (single name)

In line with expectations

Active portfolio management and cost optimisation

9

FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%

FINO Phase 1

Non Core

Objectives

• Decisive

• Timeframe

• Impactful (17.7bn1)

• Further reduce the risk profile of the Bank

• Optimise capital structure of FINO

Execution Strategy

• Phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18

• Rating on FINO received and application for GACS3 in progress

• Significant Risk Transfer application in progress

FINO Phase 2

1. 17.7bn as of June 2016 and 17.0bn as of December 2016, thanks to recovery activities. Starting from 31 December 2016 the credit exposures belonging to the FINO portfolio were recognized in item “Non-current assets and disposal groups classified as held for sale" 2. As per information published in the rights issue prospectus in January 2017, the average price of the transfer of the portfolios sold as part of the FINO transaction was approximately 13 per cent of the gross book value (17.7bn, calculated as at 30 June 2016) 3. GAranzia sulle Cartolarizzazioni delle Sofferenze

Achievements

• Framework Agreements signed in December 2016 and executed in July 20172

• Pricing confirmed. No additional provisions

Objectives

10


Transparency on sector-wide regulatory headwinds1 up to end 2019 and beyond


Calendar provisioning

FRTB

Basel IV

Model changes, recalibrations and other impacts from regulation

Definition of common standards for credit risk regulatory models

Inflow to NPEs to be fully provisioned 2 years (unsecured) and 7/8 years (secured) after default

Revision of capital framework for market risks

Credit and operational risk requirements, introducing constraints to use internal models for capital

IFRS9 First time adoption of Fair Value accounting and new provisioning rules

EBA guidelines (anticipation)

Definition of common standards for credit risk regulatory models

During Transform

2019

Beyond Transform

2019

1. No impacts have been considered in terms of prudential measures on Sovereign exposure, considering that as of now no changes to current rules have been introduced while a discussion paper was published by Basel Committee on 7 December 2017. Given the duration and composition of Sovereign portfolio proactive actions to manage potential capital impacts would be taken

Assumptions on regulation, models and procyclicality up to end 2019 confirmed

Solid capital position allows for a partial anticipation of EBA guidelines during Transform

2019


Regulatory headwinds

partial anticipation mainly on Italian models

11

EBA guidelines defining European standards for credit risk regulatory models

• Final document issued on 20 November 2017

• Requested implementation starting in 4Q20 and to be completed in 2021

• Sector-wide regulation;

mostly impacting banks with high NPEs ratios and countries with long judicial procedures

12

Others including: - higher weight of stressed macro-economic

scenarios - revised treatment of temporary cured cases - framework for the treatment of extraordinary

disposals (technical guidance expected)

More conservative discounting of recoveries (historical risk free rate + fixed spread of 5%)

Realised and projected losses of all defaults to be included in LGD computation

Introduction of prudential factors to compensate estimation errors

Description of requirements Relative weight3 Requirements Status

1. LGD (Loss Given Default) model estimates future losses based on historically realised losses 2. Incomplete workout includes defaulted positions on which collection activities are still ongoing 3. Relative weight on total expected impact based on preliminary assessment

High weight Low weight

LGD1 discount rate on recoveries

LGD incomplete workout2 treatment

Margin of conservatism

Other requirements


Basel IV introducing constraints for use of internal models for capital

1. Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation

2. Standardised approach: Regulatory defined risk weights applied by asset class according to the type of exposure/collateral

3. IRB: Internal Rating Based approach

13

No Advanced IRB3 treatment for Banks and Large Corporate (no LGD model) Overall review of risk weights of the Standardised2 approach

Capital absorption for all off-balance exposures

Conservative floors on PD and LGD parameters

No internal model allowed

Overall review of Standardised approach

Set at 72.5%

• Final document issued on 7 December 2017

• Requested implementation date on 1 January 2022

• Assumed 5-years phase-in period1

Status Description of requirements Requirements Relative weight5

Credit Risk

(Standardised2 and IRB3)

Operational Risk

Output floor4

High weight Low weight


4. Output floor: minimum capital level calculated according to Standardised approach requirement (i.e. new standardised + IRB capital requirement >= 72.5% capital requirement considering the full portfolio under standardised treatment)

5. Relative weight on total expected impact based on preliminary assessment

2019 CET1 ratio target confirmed whilst anticipating additional regulatory headwinds


1. Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1 January 2018 3. Partial anticipation impacts include EBA guidelines related effect and other minor adjustments 4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit


IFRS92



-0.3 -0.4 -0.1

-0.4

-0.8

>13.04,5 12.2/12.7 >12.5 13.8




9M17 4Q17 2018 2019


%



Partial anticipation mainly on Italian models6

14

5. Pro-forma for IFRS9 6. Including LGD incomplete workout treatment, margin of conservatism and higher weight of stressed macroeconomic scenario in selected Italian models

-0.1




FRTB2

Basel IV3


< -0.9

-0.4

-0.1

-0.9


20% 100%

13% 37% 54%

20% 40%

2024 2025

60%

66%

80%

86%

100%

< -0.8 -0.3 -0.2 -0.3 -0.3 -0.2

up to 2027

100%

100%

-0.2

65% 65%

1. Conservative approach based on ECB proposal has been used 2. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in 2024 3. Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 4. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout


< +0.1 +0.3 +0.5 +0.7 +1.0 +0.3 > +1.7


Providing transparency and clarity on regulatory headwinds post 2019


15

EBA guidelines impact on KPIs through model changes, mainly Loss Given Default

Input Model Parameter Impacts on KPIs

1. Incomplete workout includes defaulted positions on which collection activities are still ongoing 2. Expected Loss: Loss Given Default (LGD) * Probability of Default (PD) * Exposure at Default (EaD)

Higher Expected loss2

Higher CoR

Increase of Loss Given Default (LGD)

All historically realised losses factoring new EBA Guidelines (i.e.

incomplete workout1)


Quality of underlying business unchanged

16

2019 Group CoR confirmed even with impact of regulation and model changes

0.41%

Group Cost of Risk1

51

55

2019 2018

4

53

68

15

Bps

Comments

2019 Group CoR unchanged thanks to improvement of underwriting, offsetting impact of model changes, equal to 4bps

Higher one-off impact of model changes in 2018, mainly due to partial anticipation of EBA guidelines, affecting both stock and flows

Main effect on Commercial Banking Italy with 17bps in 2018 and 5bps in 2019, including partial anticipation of EBA guidelines

Impact from model changes in 2018 and 2019

Underlying business

1. Delta for line adjustment from accounting changes


improved from previous

551

17

1. CEE Division excluding Turkey

2019 NPEs targets

• 2019 NPEs target for Group Core down a further 2.0bn thanks to active recovery strategy and disposals in CEE

• Decisive de-risking resulting in an additional 2.0bn reduction of 2019 Non Core NPEs target

Comments

Gross NPEs, €bn

Non Core

17.2 19.2

Group Core1

23.1 25.1

Group1

40.3 44.3

2019 target

Previous target 4.0bn lower than previous

target

2.0bn lower than previous

target 2.0 bn lower than previous

target

Group

Gross NPEs down by a further 4.0bn by end 2019 thanks to decisive de-risking

18

2019 Gross NPEs ratio target for Group Core down to 4.7%

19

NPEs Coverage, %

Group Core - NPEs evolution

55.7 49.6

38 42 CoR, bps

• 2019 Gross NPEs ratio target improved from 5.0% to 4.7% thanks to 2.0bn lower NPEs stock target

• 2019 NPEs coverage ratio target confirmed >51%

• 2019 CoR target revised lower by 2bps to 43bps

>51

43

Group Core

Bad Loans Coverage, % 69.5 64.0

UTP Coverage, % 42.8 34.8

0.3% 2.4%

3.0%

5.8% 5.0%

2.5%

2.2%

9M16

0.3% 4.7%

2.2%

2.2%

9M17

0.3%

2019

Bad Loan

UTP

PD

>64

>39

Comments

previously 5.0%

1. Including repos, excluding intercompany and line adjustment effect 2. Calculated as: Gross NPEs / Gross Loans 3. Including line adjustments from accounting changes

Gross loans1, €bn 437 449 498


previously 453

Gross NPEs, €bn 25.2 22.5 23.1

2.0bn better than previous target

of 25.1bn

Further reduced 2019 Gross NPEs target thanks to proactive actions on Non Core

>57 NPEs coverage, % 57.1

Bad loans cov., % >63 64.2

UTP coverage, % >38 45.1

1. Excluding intercompany and repos 2. 13.3bn Bad Loans (19% Corporate, 15% Small business, 4% Old Vintage, 3% Individuals, 39% Mortgages,20% Leasing), 3.7bn UTP (67% Corporate,

6% Small business, 1% Individuals, 12% Mortgages, 14% Leasing) and 0.2bn Past Due 3. Including Debt to Equity swap 4. Including 0.4bn Leasing asset disposals

Non Core dynamics 9M17 - 2019

Gross loans, €bn

Total

-3.3

-1.0

-3.2

-4.6

-15.3

"Back" to Core

Write-offs

Repayments3

Recoveries4

Disposals

-3.2

Non Core evolution

Net Loans1, €bn 7.4 15.6

Non Core

Performing

NPEs

3.7

28.8

-15.3

2019

17.2

9M17

32.5

Gross Loans, €bn

2.0bn lower than previous

target of 19.2bn

Mostly corporate and mortgages

Mainly driven by corporate, small business

Both single name and portfolios

Cash recoveries on workout and UTP

Active portfolio management and cost optimisation

1

8.1 previous target

20

Non Core reduction of 2.0bn thanks to clear leasing run down strategy

Residual claims portfolio disposal

• Disposals of residual claims portfolio (i.e. difference between the disposal of the underlying collateral owned by UC Leasing and the original claim)

Single asset disposals/ recovery

• Increase asset sales by intensifying remarketing activity and improved sale process

Write-off

• Write-offs of NPEs with full provision and old vintage

Non Core

Leasing Non Core evolution

Gross Loans, €bn

Actions to reduce the Leasing Non Core portfolio

-2.0

2019

3.1

9M17

4.5

9M16

5.1

21

Active disposals and recovery drive the run down strategy

• Transform 2019 disposal activity has two main areas of focus:

- Portfolios, 2.9bn

- Single names, 2.9bn

Non Core

Non Core disposals (excluding FINO transaction)

Gross loans, €bn

• Securitisation vehicles: Sandokan (Real Estate), and Pillarstone (Large Industrial)

• Implementation of turnaround plans with dedicated restructuring specialists in order to optimise recoveries and migration from UTP to Bad Loans

• Current portfolio managed through securitisation vehicles kept on balance sheet, but deconsolidation potentially achievable

Recovery strategies

Total

5.8

2.9

2.9

2019

1.9

0.9

1.0

2018

1.7

0.7

1.0

2017

2.21

1.2

1.0

Portfolio

Single Names

1. Of which 1bn planned in 4Q17

22

Self-funded full rundown of Non Core by 2025 Non Core

• Performing component of Non Core reduced to zero by end 2018, meaning no new NPEs flows onwards

• 2019 NPEs target down by 2.0bn from 19.2bn to 17.2bn

• Decisive drop until 2022, especially on Mortgages, Leasing and Corporate portfolios

• Full rundown by 2025 leveraging on improving recoveries and active disposals on Leasing, Residential Mortgages and Corporate

Non Core rundown strategy

Gross loans, €bn

Non Core evolution

-10.1

Rundown

-15.3

2025 2022

7.1

5.5

1.6

2019

17.2

13.3

3.7 0.2

32.5

3.7

18.2

10.4

0.2

9M17

Performing Bad Loans UTP PD

23 1. 13.3bn Bad Loans (19% Corporate, 15% Small business, 4% Old Vintage, 3% Individuals, 39% Mortgages,20% Leasing), 3.7bn UTP (67% Corporate, 6% Small business, 1% Individuals, 12% Mortgages, 14% Leasing) and 0.2bn Past Due

1

Closing remarks

2019 CoR target of 55bps1 unchanged thanks to disciplined risk management

Improved asset quality in 2017 thanks to proactive actions on stock and disciplined origination

FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18

Proactive anticipation of European regulatory changes



24

1. Previously 49bps; delta for line adjustments from accounting changes (see annex slide 35)


M. Bianchi

One Bank, One UniCredit Transform 2019 CFO presentation


2

5 STRATEGIC PILLARS

TRANSFORM

OPERATING MODEL

ADOPT LEAN

BUT STEERING CENTRE


MAXIMISE


IMPROVE

ASSET QUALITY

ONE BANK ONE

• 2019 revenues target confirmed: higher relative contribution of fees and commissions

• 2019 cost target confirmed: higher HR savings allowing for additional IT investments

• 2019 RoTE target confirmed: >9%

Transform 2019 key targets confirmed with an improved risk profile

3

FY19 dividend3 payout increased from 20% to 30% thanks to a solid capital position Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed

Transform 2019 on track

Improved asset quality

• SREP Pillar 2 requirement lowered by 50bps to 200bps. CET1 MDA buffer confirmed above 200bps until end 2019, above 250bps after 2019


• Post 2019, annual CET1 ratio2 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds

• Gross NPEs down by a further 4.0bn1 by end 2019, better than initial Transform 2019 target

• Thanks to decisive actions Group NPEs exposure has materially reduced


Confirm capital target

Transform 2019

1. Of which: Non Core down by 2.0bn from 19.2bn to 17.2bn and Group Core down by 2.0bn from 25.1bn to 23.1bn 2. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 3. To be paid in 2020 Note: CET1 ratio fully loaded and data in Euro throughout the document unless otherwise stated

Macro

2.2

1.8 1.5 2017 2018 2019

Supportive economic outlook whilst increase in rates now expected in 2H19

4

1. Average 2017- 2019 calculated on a quarterly basis 2. Previously included in Transform 2019 3. GDP growth: Consensus Forecast (Eurozone) and Focus Economics (CEE); 3M Euribor: future from Bloomberg as of 6th December 2017; Swap 10Y: forward from Bloomberg as of 6th December 2017

Real GDP growth y/y and average, % Bps, EoP

Euro

zon

e

Mid

Sw

ap 1

0Y

Euri

bor

3M

CEE

Growth in line with consensus Interest rates and yield environment

1Q 2Q 3Q 4Q

2017 2018 2019 Avg. 2017-20191

Avg. 2017-20191

Avg. 2017-20191

-33 -33

-14 0

2017 2018 2019 Avg. 2017-20191 2017 2018 2019

UC current estimates UC current estimates

UC current estimates UC current estimates

1.8

2.6 2.4

2.2

2.8

-33 -33

0

84 106

129 94

-25

2.6

1.2

-26

67

UC estimates Dec 162




Current Consensus3 Current Consensus3

Current Consensus3 Current Consensus3

Bps, average

Transform 2019

• Strengthened corporate governance as well as simplified share capital structure

• Decreasing weight of Group Corporate Centre on Total Costs

• FTE reductions and branch closures progressing ahead of schedule

• Improving customer experience thanks to streamlined processes

• All announced decisive strategic actions successfully completed: 13bn rights issue, Pioneer and Pekao disposals

• Strengthened capital and enhanced liquidity buffer, well in excess of 195bn

• FINO phase 1 closed, all objectives achieved; phase 2 binding agreements signed to sell down below 20%, closing expected by 1Q18

• Active NPEs portfolio management with disposals in Italy and CEE

• Strong commercial dynamics thanks to network revamp

• "One Bank" business model replicated across full network, driving synergies and streamlined operations

Transform 2019 yielding tangible results underpinned by group-wide business momentum

5

Adopt lean but steering centre

Transform 2019 fully on track

Transform operating model

51% of planned FTE reductions

59% of planned branch closures

58% cost income ratio, down 0.7p.p. vs 9M16

Strengthen and optimise capital

>500bps generated by strategic actions

>100% LCR/NSFR

Improve asset quality

3.6bn of NPEs disposal completed since 3Q16, excluding FINO

10.6% gross NPEs ratio, down by 4.5p.p. vs 9M16

Weight of Group Corporate Centre of total costs down from 5.1% in 2015 to 3.8% in 9M17 to 3.5% by 2019

Achievements as of 9M17

Maximise commercial bank

value

52bn new loan production in 9M17, +14% vs 9M16

13bn AuM Net Sales in 9M17, +7bn vs 9M16

Financial assets

NII

LLP

Line adjustments from accounting changes (1/2)

6

Description Accounting change1 Impact

NPEs time value accounting2

NPEs accrued interest

Reclassification of customers loans

No Net Income and RoTE impact

NII

LLP

Loans to customers

0

0

0

New Bank of Italy regulation requires to account for Time value release as NII and no longer as LLP write-back

Interest from UTP and Past Due calculated on Net Book Value rather than Gross Book Value resulting in lower NII and lower associated LLP, according to IFRS9 guidance

Customers debt securities in issue3 excluded from customers loans and included in financial asset

Line adjustments

Net effect

1. All effects from 2018 2. Difference between (i) the sum of expected recoverable cash flows of NPEs and (ii) its Net Present Value (i.e. Net Book Value) 3. Currently included in loan book

Combined effect in 2019

NII

LLP

+0.2

-0.2

Financial assets

Loans to customers

€bn

-12

+12

Line adjustments

4.7

Line adjustments from accounting changes (2/2)

7

2015

Previous Delta Restated Previous Delta Restated

of which NII

LLP

CoR4, bps

Net income

10.9 0.51 11.5

-4.0 -0.51 -4.5

1.5 0 1.5

89 145 103

10.9 0.21 11.1

-2.4 -0.21 -2.6

4.7 0

49 65 55

Cost/Income6 61.6% -1.6p.p.1 60.0% <52% -0.6p.p.1 <52%

P&L, €bn

Other

Loans2, €bn 418 -93 409 467 -123 455

Revenues 19.9 0.5 20.4 20.4 0.2 20.6

1. Delta given by effect of: NPEs time value accounting, NPEs accrued interest 2. Excluding repos 3. Delta given by effect of: reclassification of customers loans 4. Cost of Risk computed as LLP over average loans

Combined effect equal to zero

Transform 2019 targets

5. Delta given by effect of: NPEs time value accounting, NPEs accrued interest, reclassification of customers loans 6. Cost/Income computed as total operating cost over revenues

improved

2019 key targets confirmed RoTE target >9% and further 4.0bn reduction of NPEs

8

LLP

Revenues

Net Income

Cost

-2.6

2019

20.6

4.7

-10.6

€bn, unless otherwise stated

Cost of risk

Cost/income

RoTE

CET1 ratio

Gross NPEs stock

55bps

<52%

>9%

>12.5%

40.3

2018

20.1

-11.0

68bps

12.2 – 12.7%

<55%

Key targets

-0.21

+0.21

+6bps1

unchanged

unchanged

unchanged

unchanged

unchanged

Line adjustment

1. 2019 line adjustment due to accounting changes


2019 overall revenues target confirmed: higher relative contribution of fees and commissions

9

1. Figures included line adjustment restatement as per slide 7

P&L - Revenues

Revenues target confirmed1

\

2019 different mix1

20.6

CAGR: +0.2%

2019

7.1

11.0

20.4

11.5

2.4

6.5

2015

2.5

NII Fees & Commissions Trading Income, Dividends and Other

€bn


€bn

7.0

11.1 11.0

7.1

2.5

20.6

Restated

20.6

New

2.5

+0.1

-0.1

NII

Fees & Commission

Trading Income, Dividends and Other

Increased fee target thanks to higher investment and transactional fees

10

€bn

P&L - Fees

Fees and commissions mix evolution

2015 9M17 2019

Investment

Financing

Transactional

6.5 5.0

7.1

AuM, €bn

AuM/TFA, %

CAGR: +2.3%

AuM penetration and dynamics in Italy

148123111

9M17 2015 2019

33% 36% 41%

TFA1 771 804 858

increased from previous target of 7.0bn

1. 2015 TFA restated to include elisions of intragroup custody services

NII target affected by lower for longer interest rate scenario and less dynamic loan growth

11

1. Delta calculated versus target 2019 restated at 11.1bn, as per line adjustments in slide 7 2. Line adjustments on 2017 guidance 3. Including 2017/2019 time value reduction 4.Excluding repos

CAGR '15-19 updated: [xx]%

P&L – NII

NII evolution by year

€bn

NII evolution − Main components

409 Net

Loans4 444

2019 net loans4

467 455

444

New Loan dynamics

-11

Restated line adjustment

-12

Previous

€bn

4Q19 annualised

11.6

2019

11.0

2017 guidance

10.2

Lower by 0.1bn vs. previous

target1

€bn

Commercial dynamics: +0.7bn

Term funding

-0.1

Deposits

0.3

2019 Other3

0.5

Loans

11.0

Line adjust.2

2017 guidance

2015

-0.2

Invest.ptf & markets/treasury

FX effect

10.2 -0.1

0.3 11.5

-0.1

12.2 <11.7

11.0 10.6

2015 2017guidance

2018 2019

2019 cost target confirmed: adjusted mix with higher HR savings

12

60.0% <52% Cost/

income

€bn

Cost reduction confirmed

P&L – Cost

>34% cost saving

57.9%

9M17 2015 2019

Cost evolution by year

CAGR '15-19 updated: [xx]% 2019 savings: adjusted mix

2015

-1.2

HR Savings

10.6

4.3

6.3

-0.5

Non-HR Savings 2019

1.7bn annual recurring net cost savings

12.2

4.8

7.5


Non-HR Costs HR Costs

65% 70%

35% 30%

Previous New

1.7 1.7

Non-HR Cost HR Cost

€bn

€bn

Additional IT investments thanks to higher HR savings

72%3 achieved as of November

FTE and branch reductions ahead of schedule

13

€bn

HR costs evolution

P&L – Cost

Non-HR costs evolution

-14k / -14%

FTE, '000

101 87 99 94

€bn

-944

Branches2, #

3,809 2,865 3,629 3,252

1. 9M16 equal to 3,438m, 9M17 equal to 3,353m 2 .Western Europe retail branches 3. Including additional 121 branch closures in Italy already completed as of November 17

CAGR: -4.2%

-4.7%

2019

6.3

9M17

5.2

9M16

5.5

2015

7.5

CAGR: -2.8%

-2.5%1

2019

4.3

9M17

3.4

9M16

3.4

2015

4.8

51% achieved

50.8 52.2 56.5 >54

2015 9M16 9M17 2019

34.2 34.0 44.0

>38

2015 9M16 9M17 2019

60.6 61.4 66.2 >63

2015 9M16 9M17 2019

103

68 55

2015 2018 2019

Improved NPE ratio thanks to decisive de-risking actions

14

CoR evolution2

Risk – Ratios

16.0 15.2

10.6

7.8

2015 9M16 9M17 2019

%

5.2 4.6 4.3

2.9

2015 9M16 9M17 2019

10.2 10.1

6.1 4.7

2015 9M16 9M17 2019

53 51

2019

55 4

2018

68

15

bps

Gro

ss R

atio

UTP1 Bad Loans1 NPE1

Cov

erag

e R

atio

Model changes Underlying business


1. 2015, 9M16 and 9M17 stated figure 2. Includes line adjustment 3. Includes line adjustments: for 2018 equal to 7bps and for 2019 equal to 6bps

3


15

Asset Quality

2.0bn better

than previous target of 19.2bn



Group Core – NPEs evolution1

5.8

49.6

CoR, bps 42

Gross NPEs, €bn

5.0

55.7

38

4.7

>51

434

NPE

Non Core evolution1

Gross loans, €bn

29.5

53.5

Net loans2, €bn


15.6

57.1

7.4

>57


Performing

2.0bn better than

previous target of 25.1bn

FINO phase 2 signed5

2019

23.1

10.8

11.0

1.4

9M17

22.5

11.2

10.0

1.2

9M16

25.2

13.0

10.7

1.5

Bad Loan

UTP

PD

2025 2022

7.1

2019

17.2

9M17

32.5 3.7

28.8

9M16

56.3

6.7

49.6

0

397 405 437 Net Loans2, €bn

1. For 9M16 and 9M17 stated figure 2. Excluding intercompany and repos 3. Calculated as: Gross NPEs / Gross Loans including repos

4. Includes line adjustment, previously 45bps 5. Closing expected in 1Q18

Capital

2019 fully loaded CET1 ratio target confirmed and FY19 dividend payout increased from 20% to 30%

16


1. Occurred between 4Q16 and 9M17 2. IFRS9 to be implemented on 1st January 2018 3. Partial anticipation, impacts include EBA guidelines related effect and other minor adjustments


IFRS92



-0.3 -0.4 -0.1

-0.4

-0.8

>13.04,5 12.2/12.7 >12.5 13.8





9M17 4Q17 2018 2019


%

4. Includes: retained earnings net of dividend payout (FY17: 20%; FY18: 20%, FY19: 30%) and of AT1 coupons, RWA growth and other; for 2018 includes FINO Significant Risk Transfer benefit 5. Pro-forma for IFRS9

-0.1

Cumulative organic capital generation above estimated regulatory impacts post 2019

17

Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio5 >12.5%




FRTB2

Basel IV3


< -0.9

-0.4

-0.1

-0.9


20% 100%

13% 37% 54%

20% 40%

2024 2025

60%

66%

80%

86%

100%

< -0.8 -0.3 -0.2 -0.3 -0.3 -0.2

up to 2027

100%

100%

-0.2

65% 65%


< +0.1 +0.3 +0.5 +0.7 +1.0 +0.3 > +1.7


1. Conservative approach based on ECB proposal has been used 2. Expected phase-in period of 2 years; no impact expected during phase-in, full impact in 2024 3. Our expectation is that a phase-in approach will be introduced through the EU transposition in law; assumption of 5 years is consistent with foreseen phase-in period for output floor implementation 4. Assuming net annual organic capital generation equivalent to 2019 of +0.5, net of 30% dividend payout 5. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates)

Capital – Requirements

SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps after 2019

18

1. Transitional requirements and ratios CET1r fully loaded requirements and ratios for 2019 2. New Pillar 2 Requirements for 2018 at 200bps, assumed constant for 2019 3. Includes: (i) Pillar 1, (ii) Pillar 2, (iii) Capital Conservation Buffer, (iv) G-SIFI and (v) Countercyclical buffer; see annex for further details

2019 MDA buffers confirmed above 200bps, fully loaded requirements already fulfilled

2019

9.20

12.2/12.7 >12.5

3.0/3.5

2018

10.07

>2.4

Requirement Buffer

Capital evolution1

11.57

2019

>14.0

>2.4

2018

13.7/14.2

3.0/3.5

10.70

>16.0

>2.4

16.1/16.5

12.70

2019

3.4/3.8

13.57

2018

%

Lower Pillar 2 Requirement

by 50bps2

CET1 ratio Tier 1 Capital ratio Total Capital ratio

3

Optimised TLAC funding plan

19

TLAC

1. 2019 TLAC transitional requirement (Pillar 1 MREL). MREL binding requirement to be communicated by SRB in 1Q 2018 2. 5.6bn, outstanding senior bonds, not part of the funding plan 3. 3.5bn AT1 planned of which 500m AT1 already executed in December'16 4. For comparison purposes vs. Previous Funding Plan, 1.7bn Supranational funding in Bank Austria would have to be excluded

Updated funding plan

3.53

3.4

4.5

6.0

1.75

2.4

6.0

4.5

of which to be issued

17.4 14.7 CET1 ratio

AT1

Tier 2

TLAC requirement1: >19.6%

Senior outst. TLAC eligible2

Senior Preferred

Senior Non Preferred

Subordinated req.: >17.1%

2.5% Senior bond

exemption

€bn

Previously 13.35bn

Previously 26.4bn

Target 2019

>20.5%

>18.0%

UniCredit SpA TLAC funding plan: 2017 - 2019 UniCredit Group funding plan 2017 – 2019

€bn

Total

26.3

5.8

17.4

26.5

78.7

18.3

20.0

14.1

26.4

Previous New

76.0

Supranational and other m/l term funding

Covered Bonds

Unsecured funding

TLAC funding plan

4

2019 Group Core profitability above 10%

20

1. Allocated Capital based on RWA equivalent figures calculated as 12.5% of divisional RWA, net of capital deductions 2. Tangible Equity calculated as 2019 Tangible Equity net of 2019 Non Core Allocated Capital (12.5% of RWA) 3. 2019 Group NPE ratio equal to 7.8%

..hence, Group Core represent future normalised view

2019 Group profitability

RoAC1, %

Non Core GCC CIB

11.7

CEE

13.4

CB Austria

13.3

CB Germany

9.1

CB Italy

12.9

13.2

-0.3bn net result in

2019

2019 Allocated Capital1, €bn

4.5 2.8 11.9 11.6 3.5

Fully run down in

2025

2019 Group RoTE >9%

4.3

2019 Group Core RoTE2 >10%

2019 Group Core NPE ratio3 4.7%

Non Core Allocated Capital to cover all future losses until final rundown….

3.5bn

Group Core profitability

Cost/income, % 60.01 57.9 <521 <551

Cost of Risk, bps 1031 54 551 681

Cost, €bn -12.2 -10.6 -11.0


21

1. Including line adjustment from accounting changes as per slide 7 2. Adjusted to exclude net income from Pekao and Pioneer disposals and a one-off charge booked in Non Core related to FINO; RoTE calculated considering also the capital increase and Pekao and Pioneer disposals as at 1 January 2017

Net Income and RoTE target confirmed

Revenues, €bn

CET1 ratio,%

RoTE, %

RWA, €bn

2015 2018 2019 9M17

Gross NPEs ratio – Group, %

Gross NPEs ratio – Group Core, %

Gross NPEs, €bn

361 350 406

10.4 13.8 12.2 / 12.7 >12.5

51.3 40.3

4 82 >9

20.61

10.6 7.8

5.0 4.7

20.11

Net income, €bn 1.5 4.7

77.8

16.0

6.1 down by 0.3 from of 5.0

Key targets

Net NPEs, €bn 22.3 17.7 38.3

20.41



down by 2.5 from of 20.2

Closing remarks

22

Gross NPEs down by a further 4.0bn by end 2019, better than initial Transform 2019 target Self-funded full rundown of Non Core by 2025

SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps after 2019

2019 fully loaded CET1 ratio target confirmed >12.5% including partial anticipation of regulatory headwinds

Post 2019, annual CET1 ratio1 target >12.5% thanks to organic capital generation fully absorbing expected regulatory headwinds


FY19 dividend2 payout increased from 20% to 30% Post 2019 dividend payout to increase from 30% up to 50% once upcoming regulatory impacts are confirmed

1. Refers to CET1 ratio phasing-in regulatory headwinds post 2019 2. To be paid in 2020

Closing remarks

Transform 2019 yielding tangible results underpinned by group-wide business momentum

Q&A session

J. P. Mustier

London, 12th December 2017

One Bank, One UniCredit Transform 2019 Closing Remarks



2

• SREP Pillar 2 requirement lowered by 50bps to 200bps, CET1 MDA buffer above 250bps from 2019


• Post 2019 CET1 ratio1 target >12.5%

• Transform 2019 fully on-track yielding tangible results supported by group-wide business momentum

• Improving customer experience thanks to streamlined processes TRANSFORM OPERATING MODEL

IMPROVE ASSET QUALITY

• FINO phase 1 closed, all objectives achieved; phase 2 agreements signed to sell down below 20%, closing expected by 1Q18

• Group gross NPEs down by a further 4.0bn2 by end 2019, better than initial Transform 2019 target


1 Refers to CET1 ratio phasing-in regulatory headwinds post 2019 (managerial estimates) 2. Of which: Non Core down by 2.0bn from 19.2bn to 17.2bn and Group Core down by 2.0bn from 25.1bn to 23.1bn

ADOPT LEAN BUT STEERING CENTER

MAXIMISE COMMERCIAL BANK VALUE

• Strong commercial dynamics thanks to network revamp

• "One Bank" business model replicated across full network, driving synergies and streamlined operations

• Corporate governance in line with European public company

• Simplified share capital structure

FY2019 dividend payout increased from 20% to 30% further increase up to 50% once upcoming regulatory impacts are confirmed with CET1 ratio1 >12.5%

3 1. Refers to CET1 ratio phasing-in regulatory headwinds post 2019


A simple successful Pan European Commercial Bank, with a fully plugged in CIB, delivering

a unique Western, Central and Eastern European network to its extensive client franchise

UniCredit: a pan European winner

UniCredit post 2019

4

Documents

One Bank, One UniCredit Capital Markets · PDF fileOne Bank, One UniCredit Capital Markets Day. ... for details see Annex slide 19 and 20 2. ... Increased dematerialisation process