Consolidated Interim Report as at March 31, 2015

From this quarter, UniCredit will publish a "Consolidated Interim Report - Press Release" streamlining information to the market, focusing only on material quarterly information. This format will represent the new interim report for 1Q and 3Q each year.

Significant Hike in Group Net Profit to €512 m in 1Q15 (+201% Q/Q), Despite New Costs Related to Single Resolution Fund, with Commercial Bank Italy, CIB and CEE as Main Contributors

Net Operating Profit More Than Doubled (+184% Q/Q) Thanks to Higher Revenues (+2.6% Q/Q), Continued Cost Control (-0.4% Q/Q) and Lower Cost of Risk (-62bps Q/Q)

Buoyant Fees (+7% Q/Q) and Trading (+83% Q/Q) Underpin Revenue Growth

All Time High AuM at c. €300 bn with Strong and Diversified Net Sales of €10 bn 

Including Pioneer Deal, CET1 Ratio Transitional Pro-forma at 10.50%, Well Above 9.5% Minimum Requirement Set by ECB and CET1 Ratio Fully Loaded Pro-forma at 10.35%

Confirmed Improvement in Group Asset Quality, Impaired Loans Down Thanks to Ongoing UCCMB Disposal and Lower Inflows from Performing. Solid Coverage Ratio Above 50%

Group net profit up to €512 m in 1Q15 (+201% Q/Q), despite the contribution related to new Single Resolution Fund ("SRF") equal to €91 m. Main contributors are Commercial Bank Italy with €564 m (+35.1% Q/Q), CIB and CEE divisions with a total amount of €611 m (+15.6% Q/Q). RoTE ^[1] increased to 4.8% (+3.2p.p. Q/Q).

Strong performance of Group net operating profit at €1.4 bn (+184% Q/Q), thanks to:

(i) higher revenues at €5.7 bn (+2.6% Q/Q) mainly attributable to Commercial Bank Italy at €2.2 bn (+6.8% Q/Q), CIB at €1.1 bn (+2.0% Q/Q) and CEE at €976 m (+5.8% Q/Q);

(ii) lower costs at €3.4 bn (-0.4% Q/Q) mostly related to other administrative expenses (-2.8% Q/Q);   

(iii)lower LLP at €980 m (-42.2% Q/Q) translating into an improved cost of risk of 82bps (-62bps Q/Q).

Subdued net interest income is offset by outstanding fees and commissions at €2.0 bn (+6.9% Q/Q), registering a strong growth in investment service income at €958 m (+21.4% Q/Q) in Commercial Banks (Italy and Germany). Trading income up to €619 m (+82.8% Q/Q) benefiting from strong performance in treasury and client driven activities.

AuM hits an all-time record level at c. €300 bn (+10.4% Q/Q) fostered by €10 bn of net sales (c. +151% Q/Q). Total Core financial assets set at c. €920 bn in 1Q15, leveraging on clients asset reallocation while keeping a  focused marketing intensity.

Including Pioneer deal, CET1 ratio transitional stands at 10.50% [2], well above the minimum requirement set by ECB at 9.5%, following the application of phase-in rules at 40% and CET1 ratio fully loaded at 10.35% [3].

Including Pioneer deal, Tier 1 ratio transitional at 11.32% [4] and Total Capital ratio transitional at 14.07%⁴. Basel 3 Leverage ratio transitional at 4.71% and fully loaded at 4.49% [5].

Group asset quality continues to improve with gross impaired loans [6] down at €83.2 bn (-1.4% Q/Q) due to the reduction both in gross bad loans (-1.4% Q/Q) supported by the ongoing UCCMB disposal [7] and in other gross impaired loans (-1.2% Q/Q) thanks to lower inflows from performing. UniCredit displays a very healthy coverage ratio on impaired loans exceeding 50%, the highest level among Italian banks and in line with the best European peers.

The Board of Directors of UniCredit approved 1Q15 results in May 12^th. Federico Ghizzoni, CEO of UniCredit, commented: "After the important results achieved in 2014, I deem the first quarter of 2015 very positive. In a contest that is showing some signs of recovery, UniCredit Group's net profit is in line with expectations. Asset quality is improving and our sound capital position has been confirmed. We keep on executing our Strategic Plan and profits are driven by the good operating results achieved by the different areas and activities of the bank. Despite macroeconomic tensions, CEE remains a key contributor to Group results. In all the countries where we operate we are keeping on supporting the economy by financing families, enterprises' growth and their expansion on international markets. As a large European bank, UniCredit considers innovation crucial with regard to products, organizational models and technological platforms".

GROUP

• Net profit: €512 m (+201% Q/Q, -28.1% Y/Y) and 4.8% RoTE
• Revenues: €5.7 bn (+2.6% Q/Q, +2.9% Y/Y)
• Total costs: €3.4 bn (-0.4% Q/Q, +0.2% Y/Y) with a cost/income ratio of 59% (-1.8p.p. Q/Q, -1.6p.p. Y/Y)
• Asset Quality: LLP at €980 m (-42.2% Q/Q, +16.9% Y/Y), net impaired loans ratio at 8.5% and coverage ratio at 50.6%
• Capital adequacy: including Pioneer deal, CET1 ratio transitional at 10.50%, CET1 ratio fully loaded at 10.35%, Tier 1 ratio transitional at 11.32% and Total Capital ratio transitional at 14.07%

CORE BANK

• Net profit: €876 m (+2.5% Q/Q, -13.0% Y/Y) and 9.4% RoAC [8]
• Revenues: €5.7 bn (+2.8% Q/Q, +3.7% Y/Y)
• Total costs: €3.3 bn (-1.8% Q/Q, +0.5% Y/Y) with a cost/income ratio of 57% (-2.7p.p. Q/Q, -1.9p.p. Y/Y)
• Asset Quality: LLP at €571 m (-24.8% Q/Q, +9.2% Y/Y), cost of risk at 53bps (-19bps Q/Q, +4bps Y/Y)

Net profit at €512 m in 1Q15 and above €600 m excluding the contribution related to the new SRF and other systemic charges. Annualised RoTE stands at 4.8% (+3.2p.p. Q/Q).

Total assets rise to €900.6 bn (+€56.4 bn Q/Q), driven by an increase in commercial, financial and trading asset categories. The growth in loans to customers (+€12.1 bn Q/Q) and in loans to banks (+€20.3 bn Q/Q) has been mostly financed through customer deposits (+€12.8 bn Q/Q) and TLTRO (+€7.9 bn Q/Q). Financial assets increase by €23.1 bn Q/Q, of which €10.7 bn coming from trading derivatives fully matching the correspondent upward trend in trading derivative liabilities.

RWA/Total assets ratio stands at 46.7% with RWA increasing to €420.6 bn (+€11.4 bn Q/Q) as a result of growth both in credit RWA (+€7.8 bn Q/Q) due to positive FX dynamics in CEE and Poland and in market RWA (+€4.0 bn Q/Q) mainly related to market movements, which have impacted hedging on expected net profit in CEE and investment portfolio.

Tangible equity increases to €45.6 bn (+4.1% Q/Q) due to the earning generation and the positive impact of valuation reserves.

Funding gap further shrinking to €15.4 bn (improving by €0.2 bn Q/Q), with higher loans more than compensated by increased deposits.

Asset quality dynamics continues to improve, with gross impaired loans down to €83.2 bn (-1.4% Q/Q), supported by the ongoing UCCMB disposal and net impaired loan ratio down to 8.5% (-2.5% Q/Q). Coverage ratio stands at 50.6%, after the ongoing sale of bad loan portfolio with a very high coverage ratio related to UCCMB disposal [9]. Gross bad loans down to €51.4 bn (-1.4% Q/Q) with a strong coverage ratio at 61.7%⁹. Other gross impaired loans decline to €31.8 bn (-1.2% Q/Q) thanks to lower inflows from performing portfolio. In Italy, asset quality continues to experience positive progress. As of end of March 2015, the annual growth rate of impaired loans of UniCredit S.p.A. was approximately 50% lower than the Italian banking system (ABI sample).

Including Pioneer deal, CET1 ratio fully loaded increases at 10.35% (+33bps Q/Q), with positive contributions from quarterly earning generation (+12bps), valuation reserves & other (+13bps) and FX reserves (+15bps), partially compensated by the negative effect of RWA rise (-20bps related to credit and market components and -8bps FX effect). Including Pioneer deal, CET1 ratio transitional at 10.50% (above 9.5% ECB requirement) following the application of phase-in rules at 40% with an impact of -19bps. Including Pioneer deal, Tier 1 ratio transitional and Total Capital ratio transitional stand at 11.32% and 14.07% respectively.

Basel 3 Leverage ratio sets at 4.71% on a transitional basis and at 4.49% on a fully loaded basis, confirming the solidity of UniCredit's balance sheet.

Funding plan 2015 executed at 34% for about €9.1 bn (62% issued in Italy) as of April, 30^th.

TLTRO total take-up amounts to €18.0 bn [10]. Redeployment plan on track, with over €10.5 bn granted to corporates and SMEs in Italy. Further take-up during the upcoming 2015 auctions will be evaluated from time to time.

UniCredit has completely repaid €26.1 bn of 3-year LTRO (€1.2 bn at the end of February 2015).

Net profit increases to €876 m (+2.5% Q/Q) leading to an annualised profitability (RoAC) of 9.4%. Main contributors to 1Q15 net profit are Commercial Bank Italy with €564 m (+35.1% Q/Q and 27.1% RoAC), CEE with €247 m (+89.8% Q/Q and 11.8% RoAC) and CIB with €363 m (-8.7% Q/Q and 20.9% RoAC). Asset Management and Asset Gathering record a positive trend posting a net profit of €62 m (+72.8% Q/Q) and €31 m (+17.5% Q/Q) respectively.

Net operating profit strongly up to €1.9 bn (+27.6% Q/Q, +8.2% Y/Y) is supported by revenue growth at €5.7 bn (+2.8% Q/Q, +3.7% Y/Y), reduction in costs at €3.3 bn (-1.8% Q/Q, +0.5% Y/Y) and LLP down at €571 m (-24.8% Q/Q, +9.2% Y/Y).

Strong progression is registered in revenues amounting to €5.7 bn in 1Q15. Key contributions come from Commercial Bank Italy with €2.2 bn (+6.8% Q/Q, +3.3% Y/Y), CIB with over €1 bn (+2.0% Q/Q, +6.7% Y/Y) and CEE with c. €1 bn (+5.8% Q/Q and +8.0% Y/Y at current FX).

Net interest income stands at €2.9 bn in 1Q15 (-3.4% Q/Q, -2.6% Y/Y). Adjusted for the impact of FX and days effect, the net interest income registers a small decrease (-0.4% Q/Q) with the positive dynamics of loan volume and deposit re-pricing (excluding €78 m negative impact on net interest of term deposits in Russia because of a defensive move in a high interest rate environment) mitigating the negative effect of deposit volume and market rates.

Customer loans up at €440 bn (+4.0% Q/Q), with commercial loans increasing (+2.4% Q/Q) thanks to Commercial Bank Italy (+3.0% Q/Q), CEE and Poland, where loans increased respectively by 3.6% Q/Q and 7.1% Q/Q at current FX. Institutional and market counterparts up to €45.7 bn (+19.5% Q/Q).

New medium-long term lending in Commercial Banks reaches €7.7 bn (+39.8% Y/Y): in Italy (+62.3% Y/Y) supported by corporates (+149% Y/Y), in Germany (+18.2% Y/Y) supported by household mortgages (+79% Y/Y) as well as Austria (+15.6% Y/Y) by household mortgages (+98% Y/Y).

New medium-long term lending in Commercial Bank Italy confirms the positive trend registered in the past quarters with higher margins despite lower rates. New loans granted in 1Q15 for a total amount of €4.4 bn outpacing €2.7 bn run-offs.

Direct funding [11] reaches €465 bn (+2.7% Q/Q) with customer deposits growing (+3.1% Q/Q) as well as institutional and market counterparts up to €63.7 bn (+12.6% Q/Q).

Fees and commissions amount to €2.0 bn in 1Q15 (+7.4% Q/Q, +7.5% Y/Y). AuM net sales boosted investment service fees to €954 m (+21.4% Q/Q, +14.1% Y/Y).

Dividends and other income [12] account for €118 m (-37.9% Q/Q, +13.9% Y/Y), mainly affected by volatile operating conditions in Turkey.

Trading income strongly increases to €620 m (+€279 m Q/Q, +€143 m Y/Y), benefiting from buoyant performance in treasury (+€217 m Q/Q, +€103 m Y/Y) and client driven activities (+€104 m Q/Q, -€37 m Y/Y).

Total costs well managed at €3.3 bn in 1Q15 with a cost/income ratio at 57.2%. Ongoing network restructuring translates into a reduction both in branches (-319 units Y/Y) and in FTE ^[13] (-1,108 Y/Y).

LLP at €571 m in 1Q15 leading to a reduced cost of risk of 53bps. Almost all divisions show a lower cost of risk compared to the previous quarter.

Other charges and provisions amount to €251 m, including additional costs related to SRF and other systemic risk charges for a total amount of €210 m [14].   

Income taxes for the period amount to €504 m corresponding to an effective tax rate of c. 31.4%.

After tax loss from non-current assets held for sale records a €58 m loss mainly related to the Ukrainian Ukrsotsbank ("USB").

Run-off progressing well with gross customer loans further down at €72.0 bn (-€3.0 bn Q/Q, -€11.2 bn Y/Y) mainly benefiting from bad loan sale related to the ongoing UCCMB disposal.

Gross impaired loans downward trend reaches €54.9 bn (-3.4% Q/Q, -3.7% Y/Y) coupled with a sound coverage ratio at 51.8% [15].

Gross bad loans are down to €36.3 bn (-3.5% Q/Q) with a coverage ratio above 61.5%.

Net revenues down at €64 m (-12.4% Q/Q) mainly related to €3.1 bn of performing loans transferred back to Core Bank.

Net result strongly improving with a loss of €364 m, compared to €684 m in 4Q14, thanks to lower LLP.

Commercial Bank Italy continues to be one of the main contributors among divisions with a sound revenue generation of €2.2 bn (+6.8% Q/Q, +3.3% Y/Y). Fees and commissions growth shows a sound progression up to €927 m (+18.2% Q/Q, +8.3% Y/Y) driven by AUM net sales. Total customers loans up to €133.9 bn mainly thanks to positive contribution from corporates and SMEs flows, continuing to focus on top clients rating classes. Very positive earning generation at €564 m (+35.1% Q/Q, +14.0% Y/Y) confirms the recovery trend in our domestic market, leading to a sound RoAC up to 27.1%.

CIB [16] strongly contributes to Group revenues with €1.1 bn (+2.0% Q/Q, +6.7% Y/Y), confirming an overall positive trend after an extraordinary 4Q14 and with an outstanding positioning in the financial markets across all product lines. As of today, strong league table results are reflected in ranking #2 in combined bonds & loans in EUR (#2 in EMEA Syndicated Loans and #3 in All EMEA Bonds) [17]. A cost/income ratio of 41.8% and a RoAC set at 20.9% in 1Q15 confirm the efficiency of the division.

CEE posts a net profit of €247 m (+89.8% Q/Q and +101.2% Q/Q at current and constant FX respectively), with a balanced contribution across countries. This positive earning generation is underpinned by improved operating profitability (+21.6% Q/Q) and lower cost of risk set at 120bps (-15bps Q/Q). South Eastern Europe [18] and Central Europe [19] record a sound dynamics gaining weight within the division.

Asset Management coupled with Asset Gathering show buoyant results supported by net inflows at all-time high and generate a net profit amounting to €62 m (+72.8% Q/Q, +33.4% Y/Y) and €31 m (+17.5% Q/Q, +15.3% Y/Y) respectively.

With reference to the significant events occurring during 1Q15 and after March 31^st, please see the section "Subsequent Events" in the Report on Operations accompanying the Consolidated Financial Statements at  December 31^st 2014, as well as the press releases published on the UniCredit Group website. In particular :

• "UniCredit and affiliates of Fortress together with Prelios reach the agreement on the sale of UCCMB" (press release published on February 12^th, 2015 on UniCredit Group website).
• Unicredit Bank Ukraine - Ukrsotsbank (as already published on April 10^th, 2015 on USB website and approved by its Shareholders' Meeting on April 24^th, 2015). The Ukrainian subsidiary USB has commenced the procedure for the conversion into capital of an existing loan from UniCredit Bank Austria AG for an amount of USD 250 m. The operation will allow strengthening of capital at USB, also in relation to the local regulations in force, but will have no effect on the UniCredit Group's exposure to the country.
• "Pioneer Investments and Santander Asset Management to join forces creating a leading global asset manager" (press release published on April 23^rd, 2015 on UniCredit Group website).

For the Eurozone, current year's GDP is expected to grow by 1.4%, in comparison to 0.9%  in 2014. At country level, Germany is expected to continue to outperform the European average (2.0%), while Italy will likely record the first positive result after three years of economic contraction. In January 2015, the ECB launched a large-scale Quantitative Easing program that already triggered a rapid fall in the medium and long-term financial assets yields and that is expected to support the real economy recovery mainly through currency depreciation and decrease of corporates' financing costs.

In this macro-economic scenario, the geographical and sector diversification will remain a distinctive factor. In light of the first quarter results, the Group is optimistic about the outlook for the year 2015 and is continuing to implement the initiatives envisaged in the Business Plan.

Rome, May 12 th 2015

Notes

1) RoTE = Annualized net profit / Average tangible equity (excluding Additional Tier 1).

2) CET1 ratio transitional pro-forma assuming unaudited 1Q15 earnings net of dividend accrual, 2014 scrip dividend with 75% share acceptance and Pekao minority excess capital calculated assuming 12% threshold. CET1 ratio transitional for regulatory purposes at 9.86%.

3) CET1 ratio fully loaded pro-forma assuming unaudited 1Q15 earnings net of dividend accrual, 2014 scrip dividend with 75% share acceptance, Pekao minority excess capital calculated assuming 12% threshold and the full absorption of DTA on goodwill tax redemption and tax losses carried forward.

4) Tier 1 ratio transitional pro-forma and Total capital ratio transitional pro-forma assuming unaudited 1Q15 earnings net of dividend accrual, 2014 scrip dividend with 75% share acceptance and Pekao minority excess capital calculated assuming 12% threshold. Tier 1 ratio transitional and Total Capital ratio transitional for regulatory purposes at 10.67% and 13.43%, respectively.

5) Leverage ratios are based on Capital Requirement Regulation definition not considering amendments introduced by European Commission Delegated Act officially published in Jan-15. According to EBA proposal, the new implementation is not expected before Dec-15. Leverage ratios pro-forma as for regulatory capital ratios.

6) Starting from 1Q15, the classification of loans into risk classes was updated in order to reflect the changes provided in Bank of Italy Circular 272.

7) In accordance with IFRS 5, UCCMB along with a portfolio of €2.3 bn bad loans have been reclassified as held for sale in 1Q15. As a consequence assets and liabilities that are being disposed outside the Group are not included any more in the relevant balance sheet items, as they are presented in the items "Non-current assets and disposal groups (liabilities included in disposal groups) classified as held for sale".

8) RoAC = Net profit/ Allocated capital. Allocated capital is calculated as 9% of RWA, including deductions for shortfall and securitizations.

9) Due to the reclassification of UCCMB balance sheet items under IFRS 5 (note 7), as of 4Q14 comparable coverage ratio at 50.5% on impaired loans and at 61.4% on bad loans.

10) TLTRO settlement dates 24/09/14, 18/12/14 and 18/03/15. Out of €18 bn, €15.15 bn have been taken in Italy, €2.6 bn in Austria, €148 m in Czech Republic & Slovakia and €78 m in Slovenia.

11) Direct funding defined as the sum of total customer deposits and customer securities in issue.

12) Figures include dividends and equity investments income.

13) Full time equivalent.

14) Bank Levy, contributions to preexisting Deposit Guarantee Schemes and local Resolution Funds were moved mainly from "Other Administrative Expenses" to "Other charges and provisions" (formerly named "Provision for risks and charges"). In this item, charges related to SRF were also allocated since 1Q15.

15) Due to the reclassification of UCCMB balance sheet items under IFRS 5 (note 7), as of 4Q14 comparable coverage ratio at 51.8% on impaired loans and at 61.6% on bad loans.

16) As already known, we highlight the following developments in the quarter with reference to 2 UniCredit S.p.A. loan restructuring operations into participating instruments. In particular: a) the company Carlo Tassara S.p.A. sold further listed securities for a total value of around €75 m. The credit exposure recorded in UniCredit S.p.A. in 1Q15 amounts to €119 m, against which there are recognised value adjustments for €27 m (substantially unchanged since December 31, 2014). Please refer to the consolidated accounts as at December 31, 2014 for further details of the recovery plan and its evolution to date. b) In March 2015, the financial restructuring agreement of Sorgenia S.p.A. with its lending banks came into effect and entailed: (i) the acquisition by the banks of Sorgenia S.p.A. share capital through Nuova Sorgenia Holding S.p.A. (in which UniCredit S.p.A. holds a minority stake); (ii) the transfer to Nuova Sorgenia Holding S.p.A of loans granted by the lending banks to Sorgenia S.p.A. with the commitment by the banks to convert the receivable deriving from the transfer of such loans into equity instruments ("Strumenti finanziari Partecipativi") issued by the holding company, if necessary; (iii) the rescheduling of the residual exposure, partially by subscribing a mandatory convertible bond to be converted into shares of Sorgenia S.p.A.. As of March 31st, 2015, at Unicredit S.p.A. the exposures towards Sorgenia S.p.A. and Nuova Sorgenia Holding S.p.A. have a book value of €15 m, in addition to €83 m due from Sorgenia Power S.p.A..

17) Source: Dealogic.

18) South Eastern Europe: Croatia, Romania, Bulgaria, Bosnia, Serbia.

19) Central Europe: Czech Republic & Slovakia, Hungary, Slovenia.