UniCredit: a pan-European Winner. 4Q19 and FY19 Group Results

TRANSFORM 2019 SUCCESSFULLY DELIVERED WITH STRONG PRO FORMA CET1 CAPITAL RATIO OF 13.09 PER CENT ^[1]

CAPITAL DISTRIBUTION ^[2] AT 40 PER CENT FOR FY19, PAID IN 2020

INCREASED CAPITAL DISTRIBUTION^[2] TO 50 PER CENT TO BE CONSIDERED FOR THE REMAINDER OF THE PLAN

4Q19 AND FY19 GROUP RESULTS

STRONG FY19 RESULTS

•        FY19 GROUP UNDERLYING NET PROFIT OF €4.7 BN, UP 55.5 PER CENT FY/FY ³. FY19 GROUP STATED NET PROFIT OF €3.4 BN

•        FY19 UNDERLYING GROUP ROTE AT 9.2 PER CENT, UP 1.3 P.P. FY/FY³

KEY TRANSFORM 2019 TARGETS ACHIEVED, BEATING FY19 GUIDANCE

•        FY19 REVENUES OF €18.8 BN, ABOVE €18.7 BN GUIDANCE

•        FY19 COSTS AT €9.9 BN, BETTER THAN THE ORIGINAL TRANSFORM 2019 TARGET OF €10.6 BN

•        FY19 UNDERLYING COR AT 49 BPS ⁴, BEATING THE GUIDANCE OF 55 BPS

•        FY19 NON CORE GROSS NPES OF €8.6 BN, BEATING GUIDANCE OF <€9 BN AND MORE THAN 50 PER CENT BETTER THAN THE €19.2 BN TRANSFORM 2019 TARGET

STRONG BALANCE SHEET. FY19 CAPITAL DISTRIBUTION² OF €1.9 BN, UP 3 TIMES FY/FY

•        PRO FORMA FY19 CET1 RATIO AT 13.09 PER CENT¹, PRO FORMA MDA BUFFER OF 300 BPS¹

•        PRO FORMA FY19 TLAC RATIO OF 22.35 PER CENT ⁵, PRO FORMA MDA BUFFER OF 276 BPS⁵

•        FY19 TANGIBLE EQUITY AT €53.0 BN, UP €4.7 BN AND 9.8 PER CENT FY/FY

•        PROPOSED CASH DIVIDEND OF €0.63 PER SHARE EQUAL TO €1.4 BN ⁶, THE PROPOSED SHARE BUYBACK IS EQUAL TO €0.5 BN ⁷

RECORD UNDERLYING QUARTERLY RESULTS

•        4Q19 GROSS OPERATING PROFIT AT €2.3 BN, UP 13.3 PER CENT Y/Y

•        4Q19 GROUP UNDERLYING NET PROFIT OF €1.4 BN, UP 68.5 PER CENT Y/Y ⁸

SUSTAINED GROUP COMMERCIAL RESULTS UNDERPIN STRONG FINANCIAL PERFORMANCE

•         4Q19 NET INTEREST OF €2.5 BN (-1.6 PER CENT Q/Q) AND FEES OF €1.6BN (+5.1 PER CENT Y/Y)

•         4Q19 COSTS AT €2.5 BN, DOWN 4.4 PER CENT Y/Y

•         4Q19 UNDERLYING COR OF 49 BPS⁴ (-30 BPS Y/Y) INCLUDES +2 BPS OF MODELS AND -3 BPS OF IFRS9 MACRO SCENARIO IMPACT

•         4Q19 GROSS NPE RATIO AT 5.0 PER CENT, BETTER THAN GUIDANCE AND SIGNIFICANTLY DOWN BY 2.7 P.P. Y/Y

4Q19 UNDERLYING NET PROFIT ADJUSTED FOR NON-OPERATING ITEMS AS PER CMD1⁹

•         NET CAPITAL IMPACT OF NON-OPERATING ITEMS +1 BP CET1 IN 4Q19¹⁰

•         P&L IMPACT OF NON-OPERATING ITEMS AMOUNTED TO -€2.3 BN POST-TAX⁹

•         4Q19 UNDERLYING NET PROFIT OF €1.4 BN⁸, 4Q19 STATED NET PROFIT OF -€0.8 BN

•         YAPI KREDI STAKE REDUCED TO 20 PER CENT VIA ABB IN FEBRUARY 2020. EXPECTED TO KEEP YAPI KREDI STAKE AT THAT LEVEL FOR THE REMAINDER OF THE YEAR. OVERALL CET1IN 1Q20 OF THE TRANSACTIONS IS FORESEEN TO BE AROUND +0.5 P.P. OF CET1 RATIO, ASSUMING REGULATORY DECONSOLIDATION

OUTLOOK FY20

•         REVENUES OF €18.2BN¹¹  CONFIRMED

•         COSTS <€10.2 BN CONFIRMED

•         COR OF 46 BPS CONFIRMED

•         UNDERLYING NET PROFIT OF €4.3 BN ¹², ROTE OF 8 PER CENT CONFIRMED

CAPITAL DISTRIBUTION² TO SHAREHOLDERS

•         SHARE BUYBACK TO BE SUBMITTED FOR APPROVAL BY SUPERVISOR AND AGM¹³

•         PROPOSED FY19 CASH DIVIDEND OF €0.63 PER SHARE IS EXPECTED TO BE PAID IN APRIL 2020 ¹⁴

•         INCREASED CAPITAL DISTRIBUTION ¹⁵ TO 50 PER CENT TO BE CONSIDERED FOR THE REMAINDER OF THE PLAN

•         MEDIUM TO LONG TERM CET1 MDA BUFFER TARGET CONFIRMED AT 200-250 BPS

•         EXTRAORDINARY CAPITAL DISTRIBUTION^15,16  IN 2021 AND/OR 2022 BASED ON ESTIMATE OF PROJECTED CET1 MDA BUFFER EXCESS FOR DURATION OF TEAM 23, TO BE CONSIDERED

Milan, 6 February 2020: on 5 February 2020, the Board of Directors of UniCredit S.p.A. approved the 4Q19 Group's consolidated financial accounts as of 31 December 2019.

Jean Pierre Mustier, Chief Executive Officer of UniCredit S.p.A., commenting on the 4Q19 and FY19 Group results, said :

"We have successfully delivered Transform 2019 and I am very proud of the whole team, whose hard work and commitment made this possible. We end the plan with strong results, meeting our Transform 2019 target of FY19 underlying net profit of 4.7 billion.

"This underlying net profit is the basis of our proposed FY19 capital distribution, consisting of 1.4 billion of cash dividends and a share buyback of 0.5 billion, subject to AGM and supervisory approval.

"We enjoy a solid balance sheet with a CET1 ratio of 13.09 per cent, already pro forma for the proposed buyback. After the recent communication by the ECB that the CRD5 article 104a will be applied from 2021 onwards, and thanks to our strong CET1 ratio, we will consider increasing the capital distribution to 50 per cent for FY2020, paid in 2021, and for the remainder of the plan. As we have said before, we much prefer share buybacks over M&A. This has not changed.

"With Transform 2019 successfully behind us, we are now dedicating our full focus and energy on delivering our new plan, Team 23. And while Transform 2019 was about restructuring and reshaping the Group, Team 23 focuses on strengthening and growing our customer base. We will continue to actively support the real economy, serve our clients, encourage growth across all our markets and transform our Group to keep delivering sustainable value.

"As One UniCredit we approach the new plan with the same spirit and energy we deployed for Transform 2019, doing the right thing and making sure UniCredit remains a pan-European winner."

Notes

[1] Including deduction of share buyback (subject to supervisory and AGM approval) of €467 m. Stated CET1 ratio at 13.22 per cent and stated MDA buffer at 312 bps. This does not include the SREP P2R reduction from 200 bps to 175 bps with effect from 1 January 2020.

[2]Cash dividend and / or share buyback. Share buyback subject to supervisory and AGM approval.

[3] Group underlying net profit and RoTE exclude net impact IFRS9 FTA tax effect (+€887 m in 4Q18), Fineco (+€1,176 m in 2Q19), Ocean Breeze disposal (-€178 m in 2Q19), others (-€173 m in 2Q19), disposal of 9 per cent Yapi Kredi (-€365 m in 4Q19), integration costs in Germany & Austria (-€319 m in 4Q19), Non Core LLPs given the update of Non Core rundown strategy (-€1,055 m in 4Q19 including -€6 m related to net interest) and impairment of intangible and other assets (-€468 m in 4Q19 o/w -€189 m software write-off and -€279 m other). Group underlying net profit and RoTE exclude the revaluation of real estate and effect of disposals after the recast (€215 m in FY18 and €79 m in FY19). The FY18 Group underlying RoTE calculation also excludes the net impact from the impairment of Yapi (-€846 m in 3Q18).

[4] Excluding Non Core LLPs given the update of Non Core rundown strategy (-€1,049 m in 4Q19 excluding -€6 m related to net interest).

[5] Including deduction of share buyback (subject to supervisory and AGM approval) of €467 m. Stated FY19 TLAC ratio 22.48 per cent (o/w 19.98 per cent TLAC subordination ratio and 2.5 per cent senior preferred exemption) and stated MDA buffer of 288 bps.

[6] Subject to AGM approval: 30 per cent payout on underlying net profit as cash dividend.

[7] Subject to regulatory and AGM approval: 10 per cent payout on underlying net profit as share buyback.

[8] Group underlying net profit and RoTE exclude net impact from IFRS9 FTA tax effect (+€887 m in 4Q18), disposal of 9 per cent Yapi Kredi (-€365 m in 4Q19), integration costs in Germany & Austria (-€319 m in 4Q19), Non Core LLPs given the update of Non Core rundown strategy (-€1,055 m in 4Q19 including -€6 m related to net interest) and impairment of intangible and other assets (-€468 m in 4Q19 o/w -€189 m Software write-off and -€279 m other). Group underlying net profit and RoTE exclude the revaluation of real estate and effect of disposals after the recast (€265 m in 4Q18 and -€45 m in 4Q19).to net interest) and impairment of intangible and other assets (-€468 m in 4Q19 o/w -€189 m Software write-off and -€279 m other). Group underlying net profit and RoTE exclude the revaluation of real estate and effect of disposals after the recast (€265 m in 4Q18 and -€45 m in 4Q19).

[9] 4Q19 non-operating items are including disposal of 9 per cent Yapi Kredi (-€365 m), integration costs in Germany & Austria (-€319 m), Group recast effects on real estate revaluation and disposals (-€45 m), Non Core LLPs given the update of Non Core rundown strategy (-€1,055 m in 4Q19 including -€6 m related to net interest) and impairment of intangible and other assets(-€468 m).

[10] Positive +1 bp net capital impacted of non-operating items is based on +58 bps from revaluation of real estate and -57 bps from other non operating items Including: disposal of 9 per cent Yapi Kredi (-9 bps), integration costs in Germany and Austria (-8 bps), Non Core LLPs given the update of Non Core rundown strategy (-27 bps), impairment of intangible and other assets (-12 bps).

[11] Not including quarterly, pro rata dividend contribution from Yapi.

[12] Underlying net profit is the basis for capital distribution.

[13] 10 per cent payout on underlying net profit as share buyback, subject to supervisory and AGM approval

[14] Subject to AGM approval. Ex-dividend date 20 April 2020, record date 21 April 2020 and payment date 22 April 2020. 30 per cent payout on consolidated underlying net profit as cash dividend.

[15] Subject to supervisory and AGM approval.

[16] Once all the regulatory headwinds will be clear, including impact of Basel 4.

Contacts

Investor Relations:

Tel. +39-02-88621034; e-mail: investorrelations@unicredit.eu

Media Relations:

Tel. +39-02-88623569; e-mail: mediarelations@unicredit.eu