UniCredit: a pan-European winner. 3Q18 and 9M18 Group Results

Strong underlying performance and Transform 2019 progress

Decisive non-recurring actions in 3Q18

3Q18 and 9M18 Group Results

Decisive non-recurring actions in 3Q18:
-    Yapi impairment of €0.85 bn. Commitment to investment
-    Increased provisions for US sanctions, nearing settlement. Any potential future impact not expected to be material

Group Core performance:
-    Strong commercial performance, 3Q18 net interest at €2.7 bn (+3.1 per cent Q/Q) and fees at €1.6 bn (+2.6 per cent Y/Y)
-    3Q18 net operating profit at €1.8 bn, up 21.9 per cent Y/Y
-    9M18 adjusted RoTE at 10.4 per cent, up 0.5 p.p. 9M/9M ¹
-    3Q18 gross NPE ratio at 4.3 per cent, down 85 bps Y/Y

Group performance:
-    Adjusted ¹ net profit at €875 m in 3Q18 (+4.8 per cent Y/Y) and at €3.0 bn in 9M18 (+4.7 per cent 9M/9M).3Q18 stated net profit at €29m
-    3Q18 fully loaded CET1 ratio at 12.11 per cent

Remediation actions:
-    Improved cost reduction in FY18 and FY19
-    Disposals of specific assets including real estate ²
-    Reduction of CET1 ratio BTP sensitivity ³ by around 35 per cent by the end of FY19
-    All Group legal entities to become self-funded by progressively minimising intragroup exposures

Transform 2019 progress:
-    3Q18 Group costs at €2.6 bn, down 7.7 per cent Y/Y. Achieved 93 per cent of FTE ⁴ and 88 per cent of branch reduction targets
-    Accelerated Non Core rundown by 2021 fully on track
-    3Q18 Non Core gross NPEs at €20.6 bn, gross NPE targets for FY18 and FY19 confirmed

Transform 2019 targets update:
-    Profit & loss account:
•    FY18 revenues at €19.7 bn, FY19 revenues at €19.8 bn
•    FY19 NII and fees confirmed at around €18.1 bn
•    FY18 costs below €11.0 bn and FY19 below €10.6 bn
•    FY19 C/I ratio at 52-53 per cent

-    Profitability:
•    FY18 net profit above €2.8 bn and net profit adjusted ⁵ above €3.6 bn
•    FY19 net profit confirmed at €4.7 bn
•    FY19 RoTE confirmed above 9 per cent
•    FY19 Group Core RoTE confirmed above 10 per cent

-    Capital:
•    FY18 CET1 ratio 11.5-12.0 per cent ⁶
•    FY19 CET1 ratio 12.0-12.5 per cent, MDA ⁷ buffer target of 200-250 bps

Milan, 8 November 2018: on 7 November 2018, the Board of Directors of UniCredit S.p.A. approved the 3Q18 and 9M18 Group's consolidated financial accounts as of 30 September 2018.

Jean Pierre Mustier, Chief Executive Officer of UniCredit S.p.A., commenting on the 3Q18 and 9M18 Group results:

"UniCredit has delivered strong underlying Q3 results and I am proud of the performance of our teams in an increasingly challenging macro-economic environment. Group Core net operating profit in the third quarter was 1.8 billion Euro, up 21.9 per cent year on year, while adjusted Group Core RoTE stands at 10.4 per cent for the first nine months.

During the quarter we took decisive actions related to non-recurring events; including an 846 million Euro impairment of our stake in Yapi and additional provisions relating to the upcoming settlement of alleged US sanctions violations. We are also implementing a number of measures to protect our capital position, including specific asset disposals such as real estate, and around 35 per cent reduction in the sensitivity of our CET1 ratio to BTP spreads.

We confirm our FY19 net profit target of 4.7 billion Euro and a RoTE of above 9 per cent, with Group Core RoTE above 10 per cent. The Group will continue to maintain a strong MDA buffer of 200-250 bps, equal to a fully loaded FY19 CET1 ratio of 12.0-12.5 per cent.

As a team we continue to focus on executing Transform 2019, which remains well ahead of plan, and will keep working hard to confirm UniCredit as a pan-European winner".

Notes

^[1] Group and Group Core adjusted net profit and RoTE exclude the net impact from Pekao (-€310 m FX reserve in 2Q17) and Pioneer (+€2.1 bn in 3Q17) disposals, a one-off charge booked in Non Core (-€80 m in 3Q17), the net profit from Pekao and Pioneer (+€48 m in 1Q17, +€72 m in 2Q17 and +€3 m in 3Q17) and the Yapi Kredi (Yapi) impairment (-€846 m in 3Q18); the adjustment does not include the additional provisions for US sanctions. RoTE calculated at CMD perimeter, taking into account the capital increase and Pekao and Pioneer disposals as at 1 January 2017.

^[2] Disposal plans have not yet been approved by the Boards.

^[3] 3Q18 BTP sensitivity: +10 bps parallel shift of BTP asset swap spreads has a -3.5 bps pre-tax and -2.5 bps post-tax impact on the fully loaded CET1 ratio as at 28 September 2018.

^[4] FTE stands for full time equivalent.

^[5] Group adjusted net profit excludes the Yapi impairment (-€846 m in 3Q18) and includes the additional provisions for US sanctions.

^[6] Assuming BTP spreads remain at current levels (as at 5 November 2018).

^[7] MDA stands for Maximum Distributable Amount.