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HOW TO GENERATE ORGANIC GROWTH IN RETAIL BUSINESS Roberto Nicastro Head of Retail Division

HOW TO GENERATE ORGANIC GROWTH IN RETAIL BUSINESS Roberto Nicastro Head of Retail Division. Italian Investor Conference New York - April 11 th , 2005. UCI AT A GLANCE. ROE 17.9%, Cost/Income Ratio 57.3%. Home markets in Italy and Central Europe. Global player in Asset Management

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HOW TO GENERATE ORGANIC GROWTH IN RETAIL BUSINESS Roberto Nicastro Head of Retail Division

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  1. HOW TO GENERATE ORGANIC GROWTH IN RETAIL BUSINESSRoberto NicastroHead of Retail Division Italian Investor Conference New York - April 11th, 2005

  2. UCI AT A GLANCE • ROE 17.9%, Cost/Income Ratio 57.3% • Home markets in Italy and Central Europe • Global player in Asset Management • Euro 128 bn AUM • 70,543 employees (29,540 in New Europe) • 4,528 branches (1,373 in New Europe) • Main market shares in Italy: • customer loans 10.8% • household mortgages 17.7% • customer deposits 10.1% • mutual funds 13.8% TOTAL 2004 REVENUES: Euro 10.4 bn • Main market shares in New Europe: • Deposits Mutual funds • Poland 12.7% 34.5% • Croatia 29.2% 39.8% • Turkey 4.7% 12.1% Retail 42% Private & AM 11% New Europe Corporate 18% • Current market cap around Euro 29 bn 29% 2004 data

  3. ORGANIZATION BUILT TO LEVERAGE OPPORTUNITIES IN ALL OUR CUSTOMER SEGMENTS AND MARKETS Corporate Retail Private & AM New Europe • Pekao (Poland) • Zagrebacka (Croatia) • Bulbank (Bulgaria) • KFS (Turkey) • UniBanka (Slovakia) • UC Romania • Zivnostenska (Czech Rep.) • Clarima(1) • UBM • Pioneer • UBCasa(2) • Locat(3) • Xelion(4) • Human Resources • Processes and organization • Central operations (UPA) • IT • Real Estate • Purchasing process Global Banking Services division (1) Consumer Finance (2) Retail residential mortgages (3) Leasing (4) Asset Gathering from affluent clients

  4. A SUCCESSFUL GROWTH PATH INTERNATIONALIZATION STATURE Weight of New Europe on Group Revenues Risk weighted assets, Euro bn 149.7 17.6% CAGR 98-04 +10% 83.5 0% 2004 2004 1998 1998 PRODUCTIVITY PROFITABILITY Net Income per employee, Euro x 000 EPS, Euro 31.3 0.336 26.3 CAGR 98-04 +10% 0.193 2004 2004 1998 1998

  5. 2004 ACHIEVEMENTS • STRONG VOLUME GROWTH • Assets under management up 9.0% • Customer loans up 10.8% • STRENGTHENED COMPETITIVE POSITION • Lending market share in Italy (1) up 37 bp • Mutual funds market share in Italy (2) up 39 bp • ENHANCED REVENUE MIX • Interest income excl. dividends up 3.7% • EFFECTIVE COST MANAGEMENT • Headcount down 677 in 2H04 VISIBILITY AND SUSTAINABILITY OF EARNINGS BOLSTERED BY DIVERSIFICATION OF REVENUE MIX AND BUSINESS PORTFOLIO (1) Pro-forma, including Euro 2.5 bn relative to the Locat securitization and Euro 0.5 bn relative to the District Bonds (1) Calculated according to the “old” classification methodology adopted by Assogestioni

  6. GROUP RESULTS BENEFITING FROM BUSINESS DIVERSIFICATION CONTRIBUTION TO GROUP NET INCOME BY DIVISION 2004 RORAC(4) BY DIVISION Marginal RARORAC Euro mln y/y % ch. Corporate 949 -2.7% Private & AM 36.9% Retail 545 -6.7% New Europe 30.8% New Europe 398 +29.2% Retail 19.8% Private & AM 390 +58.5% Corporate 17.4% TOTAL GROUP 2,131 +8.7% TOTAL GROUP 17.7% Cost of equity 8.58%

  7. RETAIL DIVISION IDENTITY CARD RETAIL DIVISION KEY HIGHLIGHTS Customer Loans Customer Deposits Branches Employees Total revenues 2004 data, Euro bn 40.1 42.0 2,591 23,413 3,848 UniCredit Banca 2.6 - 9 299 150 Clarima 9.7 - 15 336 125 UniCredit Banca per la Casa 4.2 2.4 127 1,088 240 Other banks (1) 56.7 44.4 2,742 25,136 4,323 Total Division (2) (1) CR Carpi and Banca dell’Umbria (2) Delta due to elisions and rounding

  8. GROW MARKET SHARE • FOCUS ON SUSTAINABLE REVENUES • IMPROVE EFFICIENCY THROUGH ACTIVE COST MANAGEMENT RETAIL DIVISION OBJECTIVES MAIN ACTIONS • “HARD” THEMES • Leverage the skills of “Category Killers” (mortgages and consumer credit) • Focus on small business customers(1) • Pursue additional cross selling opportunity • Enhance product innovation/redesign • Focus on products with longer revenue streams • Redesign processes to facilitate headcount reduction • Rationalize branch network • “SOFT” THEMES • Invest in our people • Increase customer satisfaction (1) Turnover < 3 mln Euro

  9. ABOVE MARKET GROWTH THROUGH CATEGORY KILLERS RESIDENTIAL MORTGAGES CONSUMER LENDING • Leadership in New Product Development • Speed of response / Specialised IT platform • Own networks • Successful partnerships • 100% owned • Good cooperation with the retail bank

  10. THE “BIG” SMALL BUSINESS OPPORTUNITY • WIDE AND WELL SPREAD MARKET… • 6,0 mln businesses(1),Euro 150 bn of loans(2) • Italy peculiarity (20% of European Small Businesses) • Very diversified by sub-sectors • … WITH A HIGH RETURN … • High revenues per customer (~ Euro 1,800) • Cost/income ratio <60% • Cost of risk of 100-125 bp • Capital absorption decrease with Basel II • SB owners are also potential customers for our Personal Banking business • … AND NOT EASY TO MANAGE FOR BIG AND MEDIUM-SIZE BANKS • Lack of clear focus for banks (squeezed between Corporate and asset gathering) • Difficult trade-off between the need of a fast response and Basel II requirements (1) Source Infocamere 31 12 2004 (2) Source: UCB estimate on Bank of Italy data December 2004

  11. OUR SMALL BUSINESS PROPOSITION • DEDICATED CHANNELS • 270 Small Business Centers + specialized branches • 2.000 Specialized Account Managers • 925 Developers (Hunters) • Heavy training investments (e.g. Sector Specialists) • ADVANCED FOCUS SYSTEMS • Compulsory centralized scoring system (fully operational since 2002) (Basel II) • Risk-adjusted pricing • Global and sophisticated customer view available • Prompt credit response • CUSTOMIZED PRODUCT OFFER • Imprendo 2004 (200,000 customers) • CelerCredit (5 days guaranteed response time for credit requests) • Specialty sector products • Tailor-made on-line banking (130,000 customers) • New “Start-Up” product

  12. SIGNIFICANT X-SELLING OPPORTUNITIES ON VARIOUS PRODUCT AREAS MASS MARKET AFFLUENT CURRENT ACCOUNT PACKAGE 49% 47% RESIDENTIAL MORTGAGE 5% 12% PERSONAL LOANS 2% 8% BANCASSURANCE (recurring premium) 11% 5% CLARIMA REVOLVING CARD 4% 7% ASSET MANAGEMENT 55% 13% Data as of December 2004

  13. SIGNIFICANT CROSS-SELLING OPPORTUNITIES ON LENDING PRODUCTS FROM ALIGNMENT OF PERFORMANCE TO INTERNAL AND EXTERNAL BENCHMARKS CLEAR ROOM FOR FURTHER CROSS SELLING UCB Penetration of main lending products to private customers 30-40% 8.2% REVOLVING 6.7% 5.5% 2 FACILITATING FACTORS 10-15% 12.8%* • S3 merger 7.6% PERSONAL LOANS • Clarima’s specialization and 100% ownership boost the X-selling opportunity 5.6% 15-20% 20.2%** 11.7% MORTGAGES 7.9% 2004 UCB UCB Best/Worst Regions Comparable Best practices in Europe • 8.9% excluding South ** 16.3% excluding Lombardia

  14. 10,00 HIGHER FOCUS ON PRODUCTS WITH LONGER TERM REVENUE STREAMS AVG TRANSACTION AMOUNT (€ 000) GROSS REVENUES FOLLOWING YEARS (%) AVG DURATION (YEARS) FUTURE REVENUE STREAMS 2003 FLOWS (€ mln) 2004 FLOWS (€ mln) GROSS REVENUES1° YEAR (%)1 PRODUCT ~20 103 Mortgages 0,65 1,30 ~4 10 Personal Loans 2,50 5,00 SB Short-term Loans ~5-7 12 4,00 8,00 Structured Bonds ~5 20 2,50 – 3,00 0,00 Segr. Acc. In Funds (Net group contrib.)2 ~6-10 37 0,46 0,92 Bancassurance ~8 28 4,50 0,50 Single Premium Bancassurance ~20 2 0,50 Recurring Premium Assuming equal distribution of sales during the year The contribution of the Division to the Group for the first and the following years amounts to 0,78% in mgmt fees + 0,14% in amortization of anticipations on 2004 sales. From the fifth year it changes into 1,14% due to the increase of the sales fees returned ti the Division. The value for the Bank is about 2,78% for the first year, and 0,78% in the following years.

  15. RESULTS SO FAR ARE VERY ENCOURAGING: THE FOCUS ON MARKET SHARE IS PAYING BACK… • Mortgages +22.9% y/y • Consumer credit +31.2% y/y • Small Business +10.8% y/y • EXCELLENT LENDING GROWTH (+16.1% Y/Y) … • Market share on: • household mortgages(1) at 17.71%(+54 bp) • new flows of consumer credit(2) at 4.3% (+395 bp) • … WITH HIGHER MARKET SHARES… • 4Q average spread(3) on: • new mortgages at 1.28% for UCB (stable q/q) and 1.43% for UBCasa (-3 bp q/q) • small business(4) s/term loans at 8.37% (+5 bp q/q) • revolving cards at 10.62% (+6 bp q/q) • … AND GOOD SPREAD RESILIENCE IN ALL KEY MARKETS (1) Group market share, related to mortgages to households as of Bank of Italy definition in table TDME0070 of the monthly bulletin (3) Management accounts (4) Management accounts, includes also maximum overdraft charges (2) Calculated on ASSOFIN data

  16. … AND UCI IS SHOWING A FAVORABLE TREND VS. THE BIG COMPETITORS ALSO IN TOTAL FINANCIAL ASSETS IN ITALY 1H04 vs. 2003, %ch. of market share on total financial assets in Italy UCI +0.2% Top 5 banks ex UCI -2.8% 6-10 banks -3.2% +3.3% Local banks MIB 30 banks, -2.3% Source: Banca d’Italia Conti Finanziari e Bollettino Statistico; Prometeia “Le azioni delle banche quotate”

  17. Merger of not yet unified retail banking subsidiaries Leadership in multi-channel banking Migration of cash deposits to low-cost/high-quality channels Rationalisation of the branch network (over 300 closures in 3 years) and optimisation of its governance structure 2,000 redundancies during 2005/07, to be achieved by focusing on low added-value activities, increase in back-office productivity and process re-engineering “No-Tie” approach to costs KEEP CUTTING THE “RIGHT” COST

  18. COST MANAGEMENT EFFORT ALREADY PRODUCING TANGIBLE RESULTS WITH FURTHER BENEFITS EXPECTED IN 2005 OPERATING COSTS, Euro mln 2,956 2,957 2,930 • EFFECTIVE COST MANAGEMENT ALREADY TANGIBLE… 2003(1) 2004 2002(1) TOTAL STAFF -610 vs. June 04 25,467 25,136 • … WITH BENEFITS FROM STAFF REDUCTION EXPECTED IN 2005 24,857 2004 FEB 05 1H04 UCB BRANCHES 128 more branches to be closed in 2005 2,754 -163 • BRANCH NETWORK REORGANIZATION ALREADY UNDERGOING, IN LINE WITH 3 YEAR PLAN TARGETS 2,591 Branches closed 2004 2003 (1) Pro-forma to make perimeter comparable with 2004

  19. AS A RESULT OPERATING INCOME HAS POSTED A SIGNIFICANT Q/Q GROWTH IN 2004 STEADY GROWTH OF OPERATING INCOME 2.78% Avg. Euribor 2.46% 2.16% 2.15% 2.14% 2.11% 2.09% 2.09% 419 414 391 345 343 312 310 296 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04

  20. SIGNIFICANT INVESTMENTS IN OUR PEOPLE • HEAVY INVESTMENTS IN TRAINING • > 1 mln training hours in 2005, of which 800,000 classroom training • “Leadership for Results” Project, ~3.000 managers involved in 2005 • FOCUS ON PROFESSIONAL DEVELOPMENT AND CAREER PATHS (STEP PROJECT) • Transparency and clarity on career options and required skills for each level • Employee and manager empowerment for design and implementation of growth path (self-evaluation tool) • Opportunity to self-determinate the training path

  21. CUSTOMER SATISFACTION MEASUREMENT (TRI*M INDEX) • 210.000 yearly customer interviews • 30.000 yearly competitors’ customers interviewed • INCLUSION OF CUSTOMER SATISFACTION IN THE MBO SCHEME • The TRI*M Index is a solidarity factor, amounting to 25% of incentive for 10,000 people • MONITORING AND IMPROVEMENT OF IT PLATFORM AND ITS USAGE • Availability of ATM from 89% (2003) to 96% (2004) • Operational errors down 39% (2004 vs. 2003) • MYSTERY SHOPPING AND MYSTERY CLIENT • In 2004 50 UCB branches and 50 competitors branches STRONG FOCUS ON CUSTOMER SATISFACTION

  22. 2004 RECORDED SOLID AND SUSTAINABLE RESULTS ALSO IN THE SOFT ASPECTS CUSTOMER SATISFACTION INDEX (TRI*M INDEX) EMPLOYEE SATISFACTION 2004 vs. 2003 (%) 56 48 42 44 CUSTOMER ORIENTATION 26 36 SMALL BUSINESS 13 BANK’S IMAGE 2003 IVQ 04 IVQ 04 IVQ 04 IVQ 04 8 PERSONAL ENGAGEMENT Top 3 Competitors Mid-size banks Local banks 65 INVOLVEMENT 7 51 47 43 39 2 COLLABORATION HOUSEHOLDS COMPENSATION 1 IVQ 04 IVQ 04 IVQ 04 2003 IVQ 04 Top 3 Competitors Mid-size banks Local banks IMPROVEMENT SPREAD ACROSS THE WHOLE NETWORK

  23. ENTERING 2005 WITH A STRONG MOMENTUM… • Building on 2004 achievements: • Grow revenues through market share gains in lending and financial assets: • Increase volumes in mortgages, consumer credit and small business • Cross-sell asset-gathering products to existing small business customers • Deliver efficiency improvement in line with 3-year plan • Continue headcount reduction thanks to processes redesign and branch network rationalization • Maintain strict control over cost of risk … IN LINE WITH 3 YEAR PLAN TARGETS

  24. PRELIMINARY COMMERCIAL RESULTS SHOW A GOOD START IN 1Q05 HOUSEHOLD MORTGAGES NEW FLOWS, bn REVOLVING CARDS TOTAL SPENDING(3), mln +3% +33% ~70 2.0 52 1.9 1Q04 1Q05 1Q04 1Q05 • Growth continues even after an excellent 2004 • Excellent growth, in line with all recent quarters NEW FLOWS OF PERSONAL LOANS, mln SALES OF SEGR. ACCOUNTS INVESTING IN FUNDS, bn +130% 3.5 ~450 195 ~1.9 1Q04 1Q05 2004 1Q05 • Best quarter ever • More than 50% of total 2004 sales in 1Q

  25. Annex

  26. RETAIL DIVISION: P&L Q/q % ch. Y/y % ch. Y/y % ch. mln 4Q04 2004 Interest income (incl. div.) 614 +1.5 +13.9 2,360 +0.9 Net non interest income 543 +11.5 +10.6 1,963 -2.3 Total revenues 1,157 +6.0 +12.3 4,323 -0.6 Operating costs (incl. dep.) -743 -0.5 +3.4 -2,957 +2.6 - of which: Staff costs -388 +0.7 +3.3 -1,543 +2.8 - of which: Other adm. expenses -334 +0.2 +12.4 -1,322 +4.9 Net operating income 414 +20.1 +32.8 1,366 -6.8 Net provisions -110 +36.2 -12.3 -335 +5.6 - o/w: Net write-down of loans -84 +21.5 -3.1 -281 +15.2 Net extraordinary income (loss) -123 n.m. n.m. -129 n.m. Net income 126 -21.8 +59.8 546 -6.6 Net income for the Group(2) 126 -21.9 +54.9 545 -6.7 Cost/income ratio, % 64.2 -421 bp -552 bp 68.4 +211 bp

  27. RETAIL DIVISION - DETAILS ON ASSET QUALITY ch. on Sep. 04 mln, where not specified Dec. 04 REDUCTION OF NET FLOWS OF NEW DOUBTFUL LOANS(1) VS. 2003 … Gross Doubtful Loans 3,536 +1.6% 908 Weight on Gross Loans 6.06% -17 bp 856 Coverage ratio 38.2% +30 bp -5.7% Gross Non Performing Loans 2,153 +2.8% Weight on Gross Loans 3.69% -6 bp 2003 2004 Coverage ratio 48.7% +4 bp … CONFIRMED BY 2H04 TREND VS. 1H04 446 Provisions on performing loans 315 +4.3% 410 Coverage ratio 0.58% -2 bp -8.0% ch. on 2003 2004 Cost of risk 50 bp - bp 1H04 2H04 (1) Defined as: Flow from in bonis loans to any category of doubtful loans less Flow-back from any category of doubtful loans to in bonis loans

  28. RETAIL DIVISION - MORTGAGES AND CONSUMER FINANCING RESIDENTIAL MORTGAGES STOCK, bn NEW FLOWS, bn mkt share(1) 17.71% 17.61% 17.17% +20.9% +22.9% 32.4 9.0 29.3 7.5 26.2 2.5 +24.1% UBCasa 2.0 5.7 +19.3% UCB 4.8 2003 2004 DEC03 2Q04 DEC04 CONSUMER FINANCING STOCK, bn NEW FLOWS OF PERSONAL LOANS, mln REVOLVING CARDS TOTAL SPENDING(3) (+275k revolving cards in 2004) 2004 mkt share(2) at 13.2% mkt share(4) +67.9% 7.4% +31.2% 1,163 2.8 2.4% 339 mln 2.1 693 93 mln DEC03 DEC04 2003 2004 2003 2004 (3) POS and ATM spending (1) Group market share, related to mortgages to households as of Bank of Italy definition in table TDME0070 of the monthly bulletin (4) Calculated on ASSOFIN data (2) Calculated on ASSOFIN data. Not calculated in 2003 because personal loans were sold directly by UCB and not through Clarima

  29. RETAIL DIVISION - SMALL BUSINESS STOCK, SPREAD AND CUSTOMER ACQUISITION STOCK, bn SHORT TERM SPREAD(1) 16.6 +10.8% 8.63% 8.37% 8.32% 8.25% 8.21% 15.0 2003 2004 2003 1Q04 2Q04 3Q04 4Q04 QUARTERLY TRENDS IN SMALL BUSINESS CUSTOMER ACQUISITION 19,000 18,000 17,500 15,000 12,600 4Q03 1Q04 2Q04 3Q04 4Q04 (1) Management accounts, includes also maximum overdraft charges

  30. RETAIL DIVISION - CUSTOMER LOANS AND CUSTOMER DEPOSITS BREAKDOWN AND DETAILS OF SHORT TERM SPREADS 56.7 +8.1% EOP LOANS, Euro bn UCB AVG. MARK UP(5) (Small Business), % 52.4 5.0 +7.4% 48.8 5.99 5.95 5.93 5.5 5.69 5.55 5.60 2.8 5.47 -8.1% 5.42 Other loans 5.5 +0.2% 2.3 +21.8% 2.1 +7.8% Cons. credit 16.6 15.5 +7.3% SB loans (1) 15.0 +3.3% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 UCB AVG. MARK UP(5) (Households), % 32.2 7.33 7.33 29.2 Residential mortgages (2) 26.2 +10.5% 7.21 7.18 7.18 7.08 +11.0% 7.04 7.03 2003 pro-forma(3) 2Q04 4Q04 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 EOP DEPOSITS, Euro bn UCB AVG. MARK-DOWN(5) (Households), % +5.1% 67.2 63.9 60.2 +6.5% 21.0(4) 22.8(4) 17.7 Bonds +8.8% +18.3% 2.32 2.03 1.78 1.72 1.67 1.71 15.1 15.3 15.4 Other deposits -1.9% 1.65 1.65 +0.4% Households c/accounts 27.6 29.3 27.2 +1.6% +6.2% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 2003 2Q04 4Q04 (1) Includes short term and m/l term loans (2) Includes only households mortgages (3) Including ANBI (4) 2Q04 increase vs. December is due to the issue of bonds by UBCasa to fund mortgage book expansion (5) Source: Bank of Italy matrix data

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